High-productivity individuals (e.g., higher IQ) are more likely to invest in education, so education ``signals'' high productivity to employers. But education also increases productivity (value-added from, e.g., reading Managerial Economics: a Problem-solving Approach, 8th ed), which is also valuable to employers.
A new paper uses a clever natural experiment, compulsory education in Norway to separate the two. It finds that 70% of the return to eduction is value added.
BOTTOM LINE: read Managerial Economics (8th edition)
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