The sheepskin effect (named for the

vellum Vellum is prepared animal skin or membrane, typically used as writing material. Parchment is another term for this material, from which vellum is sometimes distinguished, when it is made from calfskin, as opposed to that made from other anima ...

on which diplomas were traditionally written) is a phenomenon in

applied economics Applied economics is the study as regards the application of economic theory and econometrics in specific settings. As one of the two sets of fields of economics (the other set being the ''core''), it is typically characterized by the application ...

observing that people possessing a completed academic degree earn a greater income than people who have an equivalent amount of studying without possessing an academic degree. There are many applied economics papers which investigate the signaling effect of possession of such an academic degree. For example, if Student A is one credit short of a

Bachelor's degree A bachelor's degree (from Middle Latin ''baccalaureus'') or baccalaureate (from Modern Latin ''baccalaureatus'') is an undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting three to six ...

, while Student B has earned their Bachelor's degree, then the two students have essentially the same amount of education. However, according to the sheepskin effect, Student B will earn a greater income than Student A. Research into the sheepskin effect can be divided into studies of explicit degree effects and, because many of the useful data sets don't explicitly report degrees, studies with no explicit degree measures. The latter typically use 12 years of education as a proxy for a high school diploma and 16 years as a proxy for a Bachelor's degree. A review of a quarter century of quantitative studies of both kinds finds consistent evidence of the sheepskin effect in all but a few studies. An analysis of data from the massive

General Social Survey The General Social Survey (GSS) is a sociological survey created and regularly collected since 1972 by the National Opinion Research Center at the University of Chicago. It is funded by the National Science Foundation. The GSS collects informa ...

indicates that over 60% of the economic benefit of an education comes from the actual degree rather than the years or credits earned - especially in high school and college.Caplan, B. (2018). ''The Case Against Education''. Princeton University Press. . Pages 97-102 and footnotes.

References

{{Reflist Wages and salaries Professional titles and certifications Education economics