Consider the following statements about the signaling hypothesis of education:
a)The signaling hypothesis of education is based on the idea that attending university or college makes people more productive.
b)The signaling hypothesis of education suggests that firms rely on human capital requirements to ensure worker quality.
c)Employers rely on certain signals, such as a college diploma, to gauge a potential employee's abilities because it could lower the cost of acquiring information about the person that is not easily observed.
Which of the statements above is true about the signaling hypothesis of education?

Question

Quizplus · Accepted Answer

The signaling hypothesis suggests that education serves as a signal to employers about a potential employee's abilities, not necessarily that it makes them more productive. It implies that employers use signals like diplomas to infer qualities that are not directly observable, thus lowering information costs.

Consider the Following Statements About the Signaling Hypothesis of Education