Consider the following statements about the signaling hypothesis of education: a. The signaling hypothesis of education is based on the idea that college graduates are more productive than non-college graduates.
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 employers use educational credentials as a signal of a potential employee's abilities, as stated in statement C. Statement B is incorrect because the signaling hypothesis is not about human capital requirements but about using education as a signal. Statement A is incorrect because the hypothesis does not claim that college graduates are inherently more productive.

Consider the Following Statements About the Signaling Hypothesis of Education