Educational Performance as Signalling Device: Evidence from Italy

Following Brown and Sessions (1999) we apply the comparative techniques originated by Wolpin (1977) and Psacharopoulos (1979) to discriminate between the weak and strong screening hypotheses. Our data provides additional empirical results for the Italian labour market shifting the focus of the relationship between education and wages from the highest level of education completed to more specific measurements like degree score and completion speed. Our results show that the strong screening hypothesis is strengthened, i. e. that educational performance has an insignificant return for the self−employed, but a significantly positive return for employees.