An Academic Degree - What Is It Good For? Using matching to investigate sheepskin effects in Chile

Sammanfattning: The purpose of this study was to investigate signaling in higher education by looking at if Chilean students who receive their diploma earn more money than non-graduated students who share all other characteristics. We furthermore looked at how these signaling effects, also called sheepskin effects, develop over time. The research design is based on a matching method where we use the diploma as treatment and include gender, program of enrollment, year of enrollment, cognitive ability and total time spent in higher education in the set of covariates. Our findings suggest that there are strong and statistically significant sheepskin effects on the Chilean formal labor market. Finally, there are higher levels of sheepskin effects for men than for women, and diplomas from the most prestigious universities in Chile also show the highest levels of signaling when comparing to less prestigious ones as well as to other types of institutions for higher education.