The Screening Hypothesis and the Returns to Schooling in Argentina

Abstract

We conduct four tests of screening in education. We apply our methodology to labor market
data from Argentina, using two points in time, a period during which the returns to schooling
in Argentina increased. There do not appear to be significant increases associated with years
of schooling that would represent the attainment of a primary or secondary certificate. The
only signal that there might be screening occurs at 17 years of schooling which could be
argued represents the attainment of a tertiary education degree. However, 15 years of
schooling also represents a significant threshold in 2002. The returns to schooling are higher
in the private sector. Much of the increase in the returns to schooling overall is due to the
increase in the returns to tertiary education. The returns to complete university are higher in
the private sector. This provides no evidence of screening since the private sector seeks to
maximize profits and recognizes the higher productivity of the more educated. Overall, there
is little evidence of screening driving the returns to schooling.