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A Signaling Theory of Education under the Presence of Career Concerns

Sun Joo Hwang

KDI Journal of Economic Policy, 2016, vol. 38, issue 2, 87-101

Abstract: A person's life consists of two important stages: the first stage as a student and the second stage as a worker. In an integrated model of education and career concerns, I analyze the welfare effects of education. In Spence's job market signaling model, education as a sorting device improves efficiency by mitigating the lemon market problem. In contrast, in the integrated model, education as a sorting device can be detrimental to social welfare, as it eliminates work incentives generated by career concerns.

Keywords: education; signaling; career concerns (search for similar items in EconPapers)
JEL-codes: D86 G38 (search for similar items in EconPapers)
Date: 2016
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