Higher education, productivity revelation and performance pay jobs

This paper examines the impact of college education on workers' subsequent careers, based on a direct role of college graduation on the revelation of workers' individual ability. Using NLSY79, we document a positive relationship between ability and signaling behavior for high school graduates and a non-positive relationship for college graduates. Moreover, we show active job mobility for high ability high school graduates. We argue that these patterns are the result of post-schooling signaling of high school graduates whose individual ability, unlike college graduates, is not observed in the beginning of their careers