Assignment: How Did This Happen?
This is an exercise in explaining a process: how the signaling model reaches equilibrium. In your answer include a clear discussion of
• the job applicant's decision about further education
• the role played by the firm's beliefs
• how the signal's meaning becomes fixed ?You are approaching the end of your undergraduate career. Looking ahead, you know exactly where you want to end up: on the high-skill career path in your specialty. You know you have the ability. The question is: what do you have to do to get hired into the high-skill program? ?You have identified two potential employers in two different states. In deciding your plans, you talk to recruiters and current workers from each firm and make the following discovery. ?In Firm A, a bachelor's degree will take you where you want to go. Every person you meet in the high-skill program tells you that they came in straight from their undergraduate program.
In Firm B, a bachelor's degree will put you in the mailroom, sorting documents at the entry-level wage. Every person you meet in the high-skill program tells you that they needed a master's degree to be considered. ?Your friends are mystified when you tell them this. As an economics student familiar with signaling, you understand how the same career path could have different education requirements in different situations. ?Explain how the same signaling problem led to two different results. In what circumstances would two separate firms have the same education requirements?
Length: 1 to 2 pages