The paper perceives education as a type of money burning activity, much like advertisement, and examines its effect on social welfare. In a model where the employer's job assignment also functions as a signal a la Waldman (1984), there exists a separating equilibrium in which education credibly conveys information even when the single-crossing property fails to hold. Moreover, we also show that education as advertisement can actually be welfare-improving. This result indicates that education can be meaningful and even socially desirable even if its sole role is simply to waste resources.
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Article provided by Economics Bulletin in its journal Economics Bulletin.
Volume (Year): 10 (2004) Issue (Month): 8 () Pages: 1-8 Download reference. The following formats are available: HTML,
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Handle: RePEc:ebl:ecbull:v:10:y:2004:i:8:p:1-8
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Find related papers by JEL classification: J0 - Labor and Demographic Economics - - General D6 - Microeconomics - - Welfare Economics
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Kyle Bagwell & Garey Ramey, 1990.
"Advertising and Coordination,"
Discussion Papers
903, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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