There are two phenomena widely observed when an economy departs from an underdeveloped state and starts rapid economic growth. One is the shift of production, employment, and consumption from the traditional sector to the modern sector, and the other is a large increase in educational levels of...

Economic development is associated with the shift of production from the traditional sector (e.g. traditional agriculture and the urban informal sector) to the modern sector (e.g. modern manufacturing and commercial agriculture). Human capital accumulation, particularly, education and job...

Many empirical works suggest that education has a positive effect on earnings not only because it raises human capital but also because it functions as a signal when employers have incomplete information on employees' skills. The signaling role could have important consequences on the dynamics...