| This study explored the extent to which utility of skills and knowledge acquired through formal education affects workers' earnings. This question has been a subject of a long standing debate between proponents of the human capital theory and the screening hypothesis. The human capital theorists have argued that a relationship has been observed between earnings and schooling primarily because job performance depends on utility of skills and knowledge obtained through education. Conversely, screening theorists have argued that education has little impact on workers' job performance since, with few exceptions, workers make little or no use of skills or knowledge obtained in schools.;The study was conducted in 1988. A random sample of 840 Icelanders age 25 to 44 years old was surveyed by mail using an instrument developed by the author. The data consisted of detailed information about respondents' education and jobs.;The findings showed that three quarters of the respondents perceived making moderate to high use of the skills and knowledge acquired through formal education in their jobs. Individuals most likely to utilize their education to a high degree were those who had attained high levels of education, held high level jobs, and worked in the fields of their study. The findings, which supported the human capital thesis, indicated that utility of skills and knowledge acquired through education is the primary reason better educated workers receive more pay than less educated workers. |
