different kinds of firms. We propose a simple model of wage-setting in which productivity is only partially observable in some … firms and fully observable in others. In this setting, education serves both to enhance productivity and as a productivity … signal. Consistent with the theory, positions where productivity is likely to be less observable offer larger sheepskin …

productivity-enhancing (human capital) returns seem to be less pronounced. Over the expected course of career, we find lasting …

-individual fixed effects models, we document substantial expected labor market returns from signaling, whereas perceived productivity …