Sheepskin effects in work behaviour

Numerous studies have documented disproportionate increases in wage rates from receiving educational credentials, as opposed to from just years of education. This study shows ‘sheepskin effects’ in hours of work that are similar to the sheepskin effects in wage rates. Systematic sheepskin effects are found in labour-force participation and conditional hours of work, as well as in wage rates. Moreover, the sheepskin effects in hours of work are apparently not simply endogenous responses to the sheepskin effects in wage rates. Thus, sheepskin effects in earnings are much larger than those previously shown for wage rates. The results suggest that education is sorted more by work intentions than innate ability.