A signaling theory of education suggests that educational attainment
A)is a signal of high marginal productivity.
B)is correlated with natural ability.
C)increases the productivity of low-ability workers.
D)Both a and b are correct.

Question

Quizplus · Accepted Answer

A signaling theory of education suggests that education serves as a signal of an individual's productivity and ability, and that educational attainment is correlated with natural ability. Additionally, individuals with higher levels of education may be more productive in high-skilled jobs and may earn higher wages, further signaling their productivity. Therefore, both options A and B are correct. Option C, however, is not supported by signaling theory as it suggests that education boosts the productivity of low-ability workers, which is not necessarily the case according to the theory.

A Signaling Theory of Education Suggests That Educational Attainment