Of the theories listed below, which does the best job of explaining why educated people are paid more than uneducated people?

Question

Quizplus · Accepted Answer

The theory of human capital suggests that education and training can increase a worker's productivity, leading to higher wages. However, this alone does not explain why educated individuals earn more than uneducated individuals. The theory of signalling argues that education serves as a signal to employers of a worker's productivity and potential, and therefore justifies higher wages. Signalling theory provides a more complete explanation for the wage differential between educated and uneducated workers.

Of the Theories Listed Below, Which Does the Best Job