Laura Ehrmantraut
Pia Pinger
Renske Stans

This paper explores students' expectations about the returns to completing higher education and provides first evidence on perceived signaling and human capital effects. We elicit counterfactual labor market expectations for the hypothetical scenarios of leaving university with or without a degree certificate among a large and diverse sample of students at different stages of higher education. Our findings indicate substantial perceived returns to higher education. Moreover, by exploiting within-individual variation, we document sizeable expected labor market returns from signaling, whereas perceived productivity-enhancing (human capital) returns seem to be less pronounced. Over the expected course of career, we find lasting education premia as well as evidence consistent with employer learning. 

Publication Type
Working Paper
File Description
First version, September 2020
JEL Codes
I21: Analysis of Education
I23: Higher Education and Research Institutions
I26: Returns to Education
J24: Human Capital; Skills; Occupational Choice; Labor Productivity
J31: Wage Level and Structure; Wage Differentials
J44: Professional Labor Markets; Occupational Licensing
J32: Nonwage Labor Costs and Benefits, Retirement Plans, Private Pensions
higher education
returns to education
educational attainment
employer learning