Which of the following theories explains why increased education translates into higher wages? (i) human-capital theory
(ii) the theory of compensating differentials
(iii) signaling theory

Question

Which of the following theories explains why increased education translates into higher wages? (i)	human-capital theory
(ii)	the theory of compensating differentials
(iii)	signaling theory

Quizplus · Accepted Answer

Human-capital theory suggests that education increases a worker's productivity, leading to higher wages. Signaling theory posits that education serves as a signal to employers of a worker's ability, also resulting in higher wages. The theory of compensating differentials is unrelated to education and wages.

Which of the Following Theories Explains Why Increased Education Translates