JEcon https://doi.org/10.1007/s00712-018-0618-0 Timothy Perri Received: 17 January 2017 / Accepted: 30 May 2018 © Springer-Verlag GmbH Austria, part of Springer Nature 2018 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 JEL Classiﬁcation D82 1 Introduction Scholars and pundits continue to debate whether education increases productivity (Leonhardt 2011). In a study for the Social Science Research Council, Arum et al. (2011) ﬁnd that 36% of U.S. college students learn very little after 4 years. One economist (Caplan 2011) recently argued that little is learned in college, higher edu- B Timothy Perri firstname.lastname@example.org Department of Economics, Appalachian State University, Boone, NC
Journal of Economics – Springer Journals
Published: Jun 6, 2018
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