Signalling, Inequality and the Social Structure

15 Pages Posted: 28 Jul 2005

See all articles by Ana M. Ferrer

Ana M. Ferrer

University of Calgary - Department of Economics

Abstract

This paper proposes a theory of endogenous transmission of social status through signalling in the labour market. A signalling game is analysed, in which education, acting as a signalling good, determines one's position in society. The economy's degree of inequality is shown to be a determinant of whether a society is 'aristocratic', where high income is the source of social standing, or 'meritocratic', bestowing status on high ability. Each social structure shows a different balance between production efficiency and social factors such as equality or mobility.

Suggested Citation

Ferrer, Ana M., Signalling, Inequality and the Social Structure. Economica, Vol. 72, No. 287, pp. 515-529, August 2005. Available at SSRN: https://ssrn.com/abstract=762971

Ana M. Ferrer (Contact Author)

University of Calgary - Department of Economics ( email )

Calgary, Alberta
Canada

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