Resumen de Job Market Signaling and Returns to Education

Suquin Ge, Hans Haller

• 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.