How do partisans of the signaling model of education explain female wage growth over the last few decades? It’s easy for the human capital theory: female education went up and so did female productivity (plus discrimination fell, but let’s put that aside for now).

But if those women were just signaling, their productivities are about the same and yet their wages are way higher. Are they now massively overpaid? That hardly seems possible — when will the en masse firing begin?

Alternatively, perhaps the women were considerably underpaid in 1963, because their lack of interest in educational signaling branded them as lower quality workers. (Again, this has to be an effect net of discrimination.) But why would that have been a rational inference for employers to make? If a woman didn’t go to college or graduate school back in 1963, there were plenty of obvious sociological reasons why not, and it didn’t much signal low intelligence or low conscientiousness. It shouldn’t have lowered wages, not in the signaling model. So in 1963 there was a discrimination-based underpayment, but it is hard to argue for a signaling-based underpayment to women as a class.

You also might think that female wages have gone up since 1963 because women have been socialized to desire work and money more. But if that socialization raises productivity, it still won’t support a signaling story, which treats productivity as fixed due to type. Furthermore then the door is open for socialization theories of education, even if college is not the only source of socialization.

So why then have net-of-discrimination female wages gone up so much, if not for the human capital story?

You will note that the signaling theory seems most plausible as an explanation of what happens right after people get out of college, and thus it appeals to many students and also to some academics. Signaling theories of wages are least plausible as they try to explain broad patterns of wage movements over time, and then you must bring in human capital considerations. In similar fashion, signaling theories won’t explain the relative wage stagnation since 1999 and many other longer-term puzzles; they just don’t play in this arena.

Here are some data on female wages and labor supply over this period.

Addendum: Bryan Caplan refers me to this piece of his on related issues. And here is my Econ Duel with Alex on education and signaling.