Wages and Higher Education Participation

Eleftheriou, Konstantinos; Athanasiou, George and Petrakis, Panagiotis (2009): Wages and Higher Education Participation. Forthcoming in: Journal of Research in Educational Sciences

Abstract

The paper develops a model for the screening mechanism for higher education, within an adverse selection framework. Specifically it examines the effect of wage earned by high school graduates on higher education participation. The model pinpoints a positive relation between the “high school” wage and the number of candidates entered in higher education with positive influences on the quality of selection mechanism. An empirical examination is conducted, using U.S. data, in order to investigate the validity of our analytical results.

• Item Type: MPRA Paper
• Language: English
• Keywords: Admissions; High school wage; Higher education; Quality
• Subjects: J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity; I - Health, Education, and Welfare > I2 - Education and Research Insititutions > I28 - Government Policy; J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J39 - Other

References

Akerlof, G. (1970). The markets for lemons: Quality, uncertainty and the market mechanism. Quarterly Journal of Economics, 84, 488-500.

Chaplin, D., M. Turner, and A. Pape (2003). Minimum wages and school enrollment of teenagers: A look at the 1990 ’s. Economics of Education Review, 22, 11-21.

Dickerson, A., and P. Jones (2004). Anticipating the impact of introducing a minimum wage for 16 & 17 year old in the U.K.. University of Warwick Working Paper.

Dickey, D.A., and A.M. Fuller (1981). Likelihood ratio statistics for autoregressive time series with a unit root. Econometrica, 49, 1057-1072.

Engle, R.F., and C.W.G. Granger (1987). Co-integration and error correction: Representation, estimation and testing. Econometrica, 55, 251-276.

Landon, S. (1997). High school enrollment, minimum wages and education spending. Canadian Public Policy, 23, 141-163.

Lipowski, A., and A. Ferreira (2005). A model of students dilemma. Econophysics, arXiv: cond-mat/0410594 v2.

MacKinnon, J. (1996). Numerical distribution functions for unit root and cointegration tests. Journal of Applied Econometrics, 11, 601-618.

Neumark, D., and D. Wascher (1995). Minimum wage effects on employment and school enrollment. Journal of Business and Economic Statistics, 13, 199-206.

Pacheco, G., and A. Cruickshank (2007). Minimum wage effects on educational enrollments in New Zealand. Economics of Education Review, 26, 574-587.

Phillips, P.C.B. and P. Perron (1988). Testing for a unit root in time series regression. Biometrika, 75, 335-346.

Ragan, J. (1977). Minimum wages and the youth labor market. The Review of Economics and Statistics, 59, 129-136.

Spence, M. (1973). Job market signalling. Quarterly Journal of Economics, 87, 355-374.