Endogenous Quality Choice, Signaling, and Welfare
We consider a model in which each worker endogenously selects his own type through a private investment decision and selects a public signal in the labor market. Signaling then contributes to social welfare through its influence on the quality choice. We offer a rationale for the argument that there are too many high-type workers from a welfare perspective, identifying circumstances under which separating equilibrium generates too many high-type workers while having to use the incentive-compatible signal and treat high-type workers differently in the market. The inefficiency can then be reduced in pooling equilibrium.
|Date of creation:||2013|
|Date of revision:||2016|
|Contact details of provider:|| Postal: 1-5-Ga, Anam-dong, Sung buk-ku, Seoul, 136-701|
Fax: (82-2) 928-4948
Web page: http://econ.korea.ac.kr/~ri
More information through EDIRC
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.:
- Riley, John G, 1979. "Testing the Educational Screening Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 227-252, October.
- In-Koo Cho & David M. Kreps, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
Oxford University Press, vol. 102(2), pages 179-221.
- Kelly Bedard, "undated".
"Human Capital Versus Signaling Models: University Access and High School Drop-outs,"
Claremont Colleges Working Papers
1999-01, Claremont Colleges.
- Kelly Bedard, 2001. "Human Capital versus Signaling Models: University Access and High School Dropouts," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 749-775, August.
- Kelly Bedard, "undated". "Human Capital Versus Signaling Models: University Access and High School Drop-outs," Canadian International Labour Network Working Papers 19, McMaster University.
- Wolpin, Kenneth I, 1977. "Education and Screening," American Economic Review, American Economic Association, vol. 67(5), pages 949-958, December.
- John G. Riley, 2001. "Silver Signals: Twenty-Five Years of Screening and Signaling," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 432-478, June.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
When requesting a correction, please mention this item's handle: RePEc:iek:wpaper:1301. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kim, Jisoo)
If references are entirely missing, you can add them using this form.