In order for a college degree to be effective as a signal of worker productivity:
A)it must be easy for everyone to get a college degree.
B)it must be costly for low productivity workers to get a college degree.
C)potential employers must understand the principal-agent problem.
D)it must completely eliminate moral hazard.

Question

Quizplus · Accepted Answer

For a college degree to effectively signal worker productivity, it must be more challenging or costly for low productivity workers to obtain. This ensures that the degree differentiates between high and low productivity workers, making it a reliable signal to employers.

In Order for a College Degree to Be Effective as a Signal