In this study, we explore the role of education in explaining the labour market outcomes for a sample of graduates in medicine. More specifically, the following research question is answered: To what extent are labour market outcomes of physicians explained by the skills acquired in education, as indicated in the theory of human capital, or by competences already present at the start of education, as suggested by the screening theory? The study uses separate measurements of competence at the start and at the end of education. Moreover, we use a direct measurement of competence development during medical education. This enables us to disentangle the effects of the suggested mechanisms. The results suggest that after graduation human capital factors do not explain subsequent differences in labour market outcomes. The medical degree seems a sufficient signal of screening device as such. However, selection processes during education take place on human capital acquired before and during medical education. The following are appended: (1) The value of Progress Test scores in measuring actual learning accumulation in relevant competences in medical education; (2) Argumentation for indicators of labour market success for physicians; and (3) Selection bias in competence levels for a research sample of physicians. (Contains 8 tables and 2 figures.)