Human capital theory versus signal theory: application to the reform of the Chilean education system in the 1980s.

Summary In 1980, a radical reform of the education system in Chile took place. This reform changed the way primary and secondary education was financed through the creation of a per capita subsidy system, led to the municipalization of primary and secondary schools, and promoted the emergence of private or subsidized private schools. The challenge of the reform can be summarized by the following three imperatives: (I) educational decentralization, (II) school autonomy and (III) professionalization of the teaching force. This reform took place in the course of a regionalization process developed between 1975 and 1991 and which in fact responded to three main objectives: (I) a geopolitical objective of control and harmonious occupation of the territory, (II) a political objective aimed at replacing traditional social and political organizations with a corporatist territorial scheme, and finally (III) an economic objective oriented towards the establishment of the principle of subsidy and the privatization of certain traditional functions of the state. As a result of this reform, a growing number of Chilean analysts are asking whether the possibility of obtaining productive employment and the level of wages are not becoming disconnected from the educational level of individuals measured in years of study, and whether the quality of the institution (public, subsidized private or private) from which individuals come is not becoming a determining factor. Our work is in line with this research, since we will try to see whether since 1980 there has been a structural break in the level of performance of secondary education defined as the number of years of certified study. The theoretical tools used for this study are the traditional analytical tools used in labor economics. The method chosen to capture the consequences of the 1980 reform on the return to human capital is the use of Mincerian earnings equations on data from a pseudo panel provided by the University of Chile. In this way, we establish a differentiated framework depending on whether economic agents completed their secondary education before or after the 1980 reform of the education system. We thus highlight the signaling role of private and subsidized private schools.