Screening and Human Capital in the Australian Labour Narket of the 1990s

This paper presents tests of the screening hypothesis using data on adult males from the 1996 Australian Census of Population and Housing. These tests are based on comparisons of wage and salary earners and the self-employed, and public and private sector workers, as examples of screened and unscreened employments. The first test compares the mean levels of schooling, income and labour market experience in screened and unscreened sectors, while the second examines the returns to schooling and the goodness of fit of the earnings models for both wage and salary earning (separated into public and private sector employees) and self-employed groups. The results are equivocal, but suggest screening could be part of the earnings determination process in the Australian labour market.