Signalling and Self-Insight in the Job Market

Hans Hvide

Working Papers from Tel Aviv

Abstract: The allocation of talent in a society is an important determinant of productivity and growth. I study the informational role of education on the allocation of talent in a two-sector model where education provides workers information about their abilities. When workers and firms are equally ignorant about the abilities of a worker the unique equilibrium (Pareto-efficient) induces the mediocre to educate, while the least and the most able skip education. When workers know more than firms about their abilities, the equilibrium set expands to include equilibria where education serves as a signal. Signaling is consistent with both the most able educating, but also with the mediocre educating, and the most able skipping education.

Keywords: EDUCATION; LABOUR MARKET; HUMAN CAPITAL; INFORMATION (search for similar items in EconPapers)
JEL-codes: D31 D82 D83 I20 I28 J21 J24 J31 J41 (search for similar items in EconPapers)
Pages: 28 pages
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:fth:teavfo:2-99

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