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Job Market Signaling and Returns to Education

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  • Suqin Ge
  • Hans Haller

Abstract

We compare two partially separating equilibria in a job market signaling model with unproductive education. We find that in one of the two equilibria, the fraction of the population with a threshold education level is higher even though the cost of education is higher. Moreover, compared to the other equilibrium, the population faces a higher threshold education level, yet the educated attain lower wages. The reason for this result is that the gross return to education can be higher despite the higher cost of education and a higher threshold.

Suggested Citation

  • Suqin Ge & Hans Haller, 2018. "Job Market Signaling and Returns to Education," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 734-741, January.
    • Handle: RePEc:wly:soecon:v:84:y:2018:i:3:p:734-741
    DOI: 10.1002/soej.12243
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    Cited by:

    1. Hao, Zedong & Wang, Yun, 2022. "Education signaling, effort investments, and the market's expectations: Theory and experiment on China's higher education expansion," China Economic Review, Elsevier, vol. 75(C).

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