Tom, the manager and owner of a small company, believes in the signaling theory of education, not the human capital theory. As such, Tom would be most likely to agree with which of the following quotes?
A)"We encourage our employees to enroll in night classes to improve their on-the-job productivity."
B)"We encourage our employees to participate in online seminars to learn new skills."
C)"We pay higher wages to employees who have MBAs because, on average, their job performance is better than similar employees who do not have MBAs."
D)"When we interview prospective employees at job fairs, we are looking for college graduates because they have the determination and follow-through to finish what they start."

Question

Quizplus · Accepted Answer

The signaling theory of education asserts that education serves as a signal to employers of a job applicant's productivity and motivation, rather than as a means of enhancing an employee's productivity through the acquisition of new skills or knowledge (i.e., human capital theory). Option D is most consistent with this theory as it suggests that Tom is looking for college graduates, not because they necessarily have more job-relevant skills or knowledge, but because the mere fact that they have completed college signals to Tom that these individuals possess the determination and work ethic necessary to succeed in their job. Options A, B, and C, in contrast, all reflect the human capital theory insofar as they all suggest that education or training enhances an employee's productivity or performance on the job.

Tom, the Manager and Owner of a Small Company, Believes