Signaling and optimal sorting

Tim Perri

Journal of Economics, 2019, vol. 126, issue 2, No 2, 135-151

Abstract: Abstract I consider educational signaling of inherent ability that facilitates sorting of individuals between sectors. More able individuals are more productive in the primary sector, and less able individuals are more productive in the secondary sector. I find signaling may increase but never maximizes welfare, and is more likely to increase welfare the greater is productivity in the secondary sector, and, possibly, the lower is productivity in the primary sector. Consistent with recent increased undergraduate enrollment in the U.S, excessive signaling occurs by less able individuals. If education increases human capital, total welfare likely increases although more individuals may over-invest in education.

Keywords: Signaling; Sorting; welfare (search for similar items in EconPapers)
JEL-codes: D82 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (2)

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Working Paper: Signaling and Opitmal Sorting (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:126:y:2019:i:2:d:10.1007_s00712-018-0618-0

DOI: 10.1007/s00712-018-0618-0

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