PePe Seminar - David Jaeger

Using a unique panel survey of final-year undergraduates at six of the largest universities in Mozambique, we find that completing an undergraduate degree brings a moderate overall wage premium, conditional on a rich set of controls, including pre-degree earnings and academic performance.  We find heterogeneity in sheepskin effects across different kinds of firms and propose a simple model of wage-setting in which productivity is only partially observable in some firms and fully observable in others. In this setting, education serves both to enhance productivity and as a signal of productivity. Consistent with the theory, we find larger ``sheepskin'' effects in positions where productivity is likely to be less observable.