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Education Signalling and the School-to-work Transition

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  • García-Belenguer, Fernando

    ()
    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

  • Moral Carcedo, Julián

    ()
    (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.)

Abstract

This paper studies the relation between labour market institutions and educational systems and how this relation may affect youth unemployment rates. By constructing a signalling model in which education can be used as a signal of workers’ unobserved productivity and firms face firing costs, we investigate how the structure of the educational system and the labour market institutions may influence the school-to-work transition of young unexperienced workers. In particular, we find that different educational systems can lead to different youth unemployment rates, even for high-skilled individuals. Besides, the framework presented in this paper allows to understand how the existence of minimum wages affects individual’s education decision and helps to explain some of the observed empirical regularities.

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Bibliographic Info

Paper provided by Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History) in its series Working Papers in Economic Theory with number 2011/02.

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Length: 28 pages
Date of creation: Mar 2011
Date of revision:
Handle: RePEc:uam:wpaper:201102

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Keywords: Educational systems; youth unemployment; minimum wages.;

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