"Does Education Raise Productivity ,or Just Reflect it? Human capital vs Signalling"

Does education increase productivity or acts as a signalling method for employers of more productive individuals. How does the return on education reflect on the higher productive gains of the employees, i.e. higher educated is more productive? And finally, how does making basic education complasoury change the wage levels and higher productivity expectations of the employers.

The conslusion? Effects of education on wage was an approx 10% increase per year of education. On effects of education were due to enhanced productivity(learnt while at school) is inconsulsive. The study found that education differences simply reflect pre-existing ability differences.That is they are a pure signalling effect for employers for better workers.

And finally the question, does educational inequality decreased by complusory education. No. In the long term, the well-to-do will get more educated/specialized leading the lower classes stuck with complusory education. While basic education is necessary interms of health reasons, sanity, legal reasons ( you need to know what you are signing), it does not mean increased wages . Take for example, in the middle ages, nobody would write anything except for the well to do. Soon common folk started writing, but to keep ahead higher classes got more educated, learnt latin and stuff. The inequality remained in terms of wages. Might not be the best example, but you get the idea.

By the way, i got this material from, "The economic Journal,Nov 2004" where they also mentioned this book, Our Modern Times:The new Nature of Capitalism in the information age by Cohen (Daniel). Want to see if i can read it somewhere.