On the Efficiency of a Competitive Equilibrium with Education as a Screening Device,
RAND CORP SANTA MONICA CALIF
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The purpose of this paper is to demonstrate that the Spence-Arrow conclusion fails once we drop a tacit, highly unrealistic assumption of their analysis. The assumption is the while unexpectedly good educational performance by prospective workers is communicated to employers, unexpectedly poor levels of educational performance are not. The reason the assumption is so unrealistic is that since education typically serves to increase an individuals work productivity as well as to screen him for natural ability to work, even workers with lower than expected eductational performance typically will want to present evidence to employers of their having attained a particular level of education and in so doing they normally will communicate the fact of their somewhat disappointing performance.
- Humanities and History