This chapter explores the sheepskin effect in education and its implications in the labor market, discussing how completing education, especially at the college level, tends to result in higher earning potential. The speakers also delve into the concept of signaling in education and question why the final year of education has a significantly higher payoff.
Bryan Caplan of George Mason University and the author of The Case Against Education talks about the book with EconTalk host Russ Roberts. Caplan argues that very little learning takes place in formal education and that very little of the return to college comes from skills or knowledge that is acquired in the classroom. Schooling, he concludes, as it is currently conducted is mostly a waste of time and money. Caplan bring a great deal of evidence to support his dramatic claim and much of the conversation focuses on the challenge of measuring and observing what students actually learn.