Contemporary Labor Economics 9th Edition by Campbell Mcconnell, Stanley Brue, David Macpherson, Robert Powell, David Colander

Exercise 9

Indicate the implications of each of the following for estimates of the rate of return on a college education: (a) the screening hypothesis, (b) the possibility that a portion of one's expenditures on college should be considered as consumption rather than investment, (c) the fact that people who go to college are generally more able than those who do not, and (d) the fact that jobs acquired by college graduates generally entail larger fringe benefits than the jobs of high school graduates. What implications do the ability problem and the screening hypothesis have for public policy toward education