Determine a general condition that makes workers want to separate themselves using education as a signal. That is, find a condition that makes high-ability workers want to go to college while low-ability workers do not. Given the wages and costs for both types of workers (wh = 20,wl =16,ch = 2, and cl = 5) and the proportion of high-ability workers in the population (0 = 0.25), does the condition hold? What wages are paid to each type of worker? (a) The condition holds; firms pay wh = $20 and wl = $16 (b) The condition holds; firms pay wh = $18 and wl = $11 (c) The condition does not hold; firms pay wh = $20 and wl = $16 (d) The condition does not hold; firms pay wh = wl = w = $17

Determine a general condition that makes workers want to separate themselves using education as a signal. That is, find a condition that makes high-ability workers want to go to college while low-ability workers do not. Given the wages and costs for both types of workers (wh = 20,wl =16,ch = 2, and cl = 5) and the proportion of high-ability workers in the population (0 = 0.25), does the condition hold? What wages are paid to each type of worker? (a) The condition holds; firms pay wh = $20 and wl = $16 (b) The condition holds; firms pay wh = $18 and wl = $11 (c) The condition does not hold; firms pay wh = $20 and wl = $16 (d) The condition does not hold; firms pay wh = wl = w = $17

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.12P

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