Posted by: Sean | January 17, 2012

Education as Signalling

In your micro classes right about now you’re being given a fairly heavy dose of the “education as signalling” model of the world; here’s a summary by Bryan Caplan, who believes in the signalling model:

Why do employers care about grades and diplomas?  The “obvious” story, to most people, is that professors teach their students skills they’ll eventually use on the job.  Low grades, no diploma, few skills…but…

According to the signaling model, employers reward educational success because of what it shows (“signals”) about the student.  Good students tend to be smart, hard-working, and conformist – three crucial traits for almost any job.  When a student excels in school, then, employers correctly infer that he’s likely to be a good worker.  What precisely did he study?  What did he learn how to do?  Mere details.  As long as you were a good student, employers surmise that you’ll quickly learn what you need to know on the job.

Here‘s a more recent post in which Bryan argues that his view is common (at least among economics bloggers) and here he is arguing that the econometrics support his view.

Countering that, Tyler Cowen (both Bryan and Tyler are economists at George Mason University), argued today that recent data from the labour markets is not well explained by the signalling theory (it’s not an easy post to excerpt, so I’ll let you just give it a read through).

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