The role of educational certification in raising earnings: Evidence from Israeli census data

Using census data relating to secondary school completers in Israel, alternative explanations for the well documented positive relation between education and earnings are examined. Controlling for the effect of secondary school completion and courses that are vocational in orientation, the results suggest that certification may exert an independent, positive influence on earnings, over and above the investment effect of human capital. While it remains unclear whether the certification effect should be interpreted as the result of screening for ability or of pure credentialism, the evidence from age group regressions seems to be more supportive of the screening model.