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Education and Job market signalling: How robust is the nexus?

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  • Massimo Giannini

Abstract

In this paper the Signalling approach to the explanation of wage differentials is analysed in a critical way. Departing from the classic Spence's model, the article shows how the introduction of inequalities in accessing to education leads to separating equilibria characterised by redistributive effects among workers and firms, with lower wages for high skill workers respect to the traditional model. Moreover pooling equilibria can also exist as effect of such inequalities; in this case a unique wage exists for all types of workers, operating as a redistributive effect from high-skill to low-skill workers.

Suggested Citation

  • Massimo Giannini, 1999. "Education and Job market signalling: How robust is the nexus?," Working Papers in Public Economics 35, University of Rome La Sapienza, Department of Economics and Law.
    • Handle: RePEc:sap:wpaper:wp35
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    References listed on IDEAS

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    1. repec:fth:prinin:357 is not listed on IDEAS
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Signalling; Human Capital; Inequality.;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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