The visible hand in economics

It’s more than a signal

Posted on: April 1, 2008

Tyler Cowen reports that the signalling model of education is dead! Apparently new research indicates that the value of the signal accounts for no more than 28% of the cost of education. It only takes a couple of months for an employer to learn your productivity, so how can it take years of education to signal what an employer can learn in months?

Let’s not forget that education has always been about both human capital accumulation and signalling. 28% isn’t huge, but it’s significant. It certainly doesn’t kill off the signalling model, although it does suggest that it shouldn’t provide the primary motivation for getting education.

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1 Response to "It’s more than a signal"

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