The impact of consumer credentialism on employee and entrepreneur returns to higher education

Abstract

This article examines the marginal rates of return to education for private sector employees and self-employed workers to test for the existence of consumer screening, or credentialism. Using 1980 national cross-sectional microdata and classifying occupations as either goods-producing or services-producing occupations, changes in across-group and within-group effects on benefits to education are estimated using alternative regression models. The results are that restricting the samples to service occupations does not enhance relative returns to college education in favor of the self-employed. Thus, the proposition that the highly educated entrepreneurs are atypically influenced by consumer credentialism is rejected. © 1987.