Sheepskin Effects in the Returns to Education: An Examination of Women and Minorities

Recent confirmation of sheepskin effects in the returns to education for prime age white males has been taken as evidence of screening or signaling in the labor market. The authors report evidence of sheepskin effects among women and minority males, and demonstrate that they are somewhat smaller for lower diploma years, but larger for higher diploma years, than those of white males. These are among the first broad-based results confirming the frequent contention derived from signaling models that minorities have smaller returns to low productivity signals, but larger returns to high productivity signals.