One reason that college graduates earn higher wages than non-graduates is because

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The signaling theory suggests that education serves as a signal of an individual's productivity, motivation, and abilities. Employers are willing to pay more for college graduates because they believe that college graduates possess these qualities, which increase their productivity and value to the organization. In contrast, non-graduates may lack these qualities and therefore receive lower wages. This theory implies that college graduates earn higher wages not necessarily because they possess additional skills learned in college, but because their degree serves as a signal of their potential as productive employees.

One Reason That College Graduates Earn Higher Wages Than Non-Graduates