Signals and closure by degrees: the education effect across 15 European countries

Stratification research has extensively studied country-differences in the strength of the relationship between education and labor market outcomes. This research has mostly neglected the different mechanisms that could explain why education is rewarded. In this paper we argue that not only the strength of the relationship, but also the mechanisms explaining why education is rewarded differ between countries. National institutions affect how employers see education, what it brings to the organization, and how workers signal their potential productivity. Empirically we focus on the partial effects of qualifications on top of years of education in 15 European countries. We find that strongly vocationally oriented and differentiated schooling systems have relatively strong net effects of qualifications on occupational status, which is explained by stronger signalling by qualification levels in those countries. Furthermore, in coordinated market economies we find that vocational education leads to higher status jobs relative to liberal market economies, which is explained by higher levels of closure implemented by coordination institutions.