In a Labor-Market Pooling Equilibrium with High-Skill and Low-Skill Workers

question 23

Multiple Choice

In a labor-market pooling equilibrium with high-skill and low-skill workers and where a costly educational degree is used as a signaling device,

• A) the high-skill workers' wage is larger than the low-skill workers' wage.
• B) the low-skill workers' wage is zero.
• C) the high- and low-skill workers receive the same wage.
• D) the high-skill workers' wage is equal to the low-skill workers' wage plus the cost of obtaining a degree.

---

Definitions:

Sociocultural-graded Influences

Factors that affect an individual's development and behavior, based on the cultural, social, and economic contexts in which they are raised.

History-graded Influences

events and experiences that affect a particular generation or cohort, such as wars, economic changes, and technological advancements.

Age-graded Influences

Social and cultural factors that impact individuals differently depending on their age, often structuring experiences and expectations throughout the life course.

Non-normative Life Event Influences

Pertains to unique life events that occur unpredictably and aren't common to all individuals, significantly impacting one's life trajectory differently from societal norms.