A Signaling Theory of Education Under the Presence of Career Concerns

KDI Journal of Economic Policy 2016, 38(2) 87-101

16 Pages Posted: 27 Jun 2016

See all articles by Sunjoo Hwang

Sunjoo Hwang

Korea Development Institute (KDI)

Date Written: May 31, 2016

Abstract

A person’s life consists of two important stages: the first stage as a student and the second stage as a worker. In an integrated model of education and career concerns, I analyze the welfare effects of education. In Spence’s job market signaling model, education as a sorting device improves efficiency by mitigating the lemon market problem. In contrast, in the integrated model, education as a sorting device can be detrimental to social welfare, as it eliminates work incentives generated by career concerns.

Keywords: education, signaling, career concerns

JEL Classification: D86, G38

Suggested Citation

Hwang, Sunjoo, A Signaling Theory of Education Under the Presence of Career Concerns (May 31, 2016). KDI Journal of Economic Policy 2016, 38(2) 87-101, Available at SSRN: https://ssrn.com/abstract=2800893

Sunjoo Hwang (Contact Author)

Korea Development Institute (KDI) ( email )

263 Namsejong-ro
Sejong-si 30149
Korea, Republic of (South Korea)

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