Which of the following statements is TRUE?
A) Evidence suggests that schooling raises earnings only by raising productivity.
B) Sheepskin effects are consistent with signaling.
C) The sheepskin effect refers to evidence that students with a four-year college degree earn no more than students with four years of college but no degree.
D) The effects of signaling are the smallest for recent graduates who are just starting to work.

Question

Quizplus · Accepted Answer

The sheepskin effect refers to the observation that individuals who have completed a degree (e.g., high school or college) earn significantly more than those who have almost completed the degree but did not actually graduate, suggesting that the degree itself signals something valuable to employers, consistent with signaling theory.

Which of the Following Statements Is TRUE