The economist appears to be arguing that this study indicates that elite colleges lead to higher wages due to signaling and not the quality of education.
However, the study basically compares the wages of people who scored about the same in the standardized exams after separating those who made it into the elite colleges and those who didn’t. The ones who made it into the elite colleges appeared to make more money than those who didn’t.
So basically, this study tells us that going to an elite college helped someone make more money than someone else who had about the same intelligence (as defined by their standardized test scores to enter the college) but went to a non elite college.
However, unlike what the economist is claiming, this does not tell us whether this effect is because of signaling, or because the quality of education is better. The economist claims that the study indicates its signaling, but the higher earnings could very well be explained by better instruction in the elite colleges as well.
I also suspect those who went to elite colleges feel far more pressure to inflate their reported earnings relative to those who didn’t.