Economist Michael Spence Uses a Concept Called the "Signaling Hypothesis

question 212

Essay

Economist Michael Spence uses a concept called the "signaling hypothesis" to argue that college graduates don't earn high incomes because the skills they learned while in college serve to increase their productivity. Explain the signaling hypothesis. Is there evidence that the signaling hypothesis is not valid?

---

Definitions:

Subjective

Pertaining to or depending on the individual's perceptions, feelings, or opinions.

Standard

An established level of quality or attainment used as a measure, norm, or model in comparative evaluations.

Anticipatory Repudiation

Occurs when one party to a contract indicates, before the performance is due, that they will not fulfill their contractual obligations.

Sugar Shortage

A situation in which the availability of sugar is significantly less than the consumer demand, often leading to increased prices and supply constraints.