The underlying assumption made so far is that education make individuals more productive; therefore graduates receive higher returns than those without educational qualifications. However, there is another way of looking at this. It is easy to see why a degree in accounting and finance would be helpful in the banking sector but is the same true for a degree in philosophy? It could be that a degree does not actually increase productivity but it acts as a signal to employers that this individual has a high level of innate ability and the potential for high productivity. Higher education is performing a screening function for firms by identifying individuals with higher potential productivity levels.