Admission standards, student effort, and the creation of skilled jobs

William Blankenau () and Yuan Gao

Economic Modelling, 2014, vol. 43, issue C, 209-216

Abstract: We consider the implications of expanding enrollment through lower standards in a model with human capital externalities and a market failure. Workers and firms make uncoordinated investment choices prior to random matching. Investment choices depend on the expected productivity of the counterpart in production. The setting generates a potential human capital externality as a more skilled labor force induces more skilled job openings. Exploiting the externality is complicated by a market failure which may cause some workers to earn a degree but not put forth the effort required to become highly skilled. We show that beyond a threshold, increased enrollment through low standards can be poor policy. Policies which increase returns to agents and firms in best matches can improve outcomes.

Keywords: Education policy; Education standards; Human capital; Time allocation; Matching; Student effort (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:43:y:2014:i:c:p:209-216

DOI: 10.1016/j.econmod.2014.07.041

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