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RESEARCH PRODUCT

Sheepskin Effects in the Spanish Labour Market: A Public–Private Sector Analysis

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ABSTRACT The aim of this paper is to contrast the nature of the effect of education, Human Capital or Screening, in the Spanish labour market. We use the Hungerford and Solon methodology to distinguish between the returns to schooling from mere years of schooling as a reflection of their productive–enhancing contribution (human capital) and the returns to schooling from academic certificates as signals of the individual’s ability (sheepskin effects). We separate our data into public and private sector workers. In the public sector the institutional restriction in the access and in the wage settings might force certificate rewards. Those not necessarily should be interpreted as sheepskin effects but as a consequence of educational requirements at initial hiring. Higher flexibility in the private sector would allow employers to use certificates as signals of greater productivity. Our estimations show little evidence of sheepskin effects in the private sector concentrated in upper secondary education while w...