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human capital model

A labor economist estimates a regression of log earnings on schooling (s), experience (e), ability (a, as measured by IQ), and interactions between schooling and experience, and ability and experience, and obtains the following estimates (assume all estimate are statistically significant):

In (Y) = 9.90 + .07S +.03E +.04A - .005 S E + .008 A E

Is this evidence more consistent with the human capital model, or the signaling model? Explain your answer.

Solution Preview

Apparently, this evidence is more consistent with the human capital model. This is because the coefficient for schooling is larger than ...

Solution Summary

A display of evidence is more consistent with the human capital model.

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