Suppose the minimum time taken to get a university degree is increased from three years to six years.Under the signalling view of education this is likely to lead to:
(i) all employers being able to better distinguish high-ability job applicants from low-ability applicants
(ii) top-tier employers (eg.investment banks, law firms) being able to better distinguish high-ability job applicants from low-ability applicants
(iii) an increase in human capital and a corresponding increasing in the marginal product of labour
A)(i) only
B)(ii) only
C)(i) and (ii) only
D)(ii) and (iii) only

Question

Quizplus · Accepted Answer

The signalling view of education suggests that the educational degree serves as a signal to employers about an individual's ability and potential productivity. Increasing the minimum time to get a university degree would likely result in top-tier employers being able to better distinguish high-ability job applicants from low-ability applicants. This is because those who are committed to investing six years in getting a degree may signal to potential employers that they are more dedicated and have a stronger work ethic than those who only invest three years. However, this change is unlikely to impact all employers, so option (i) is incorrect. While an increase in human capital may result from more education, there is no evidence to suggest that this would occur as a direct result of increasing the minimum time to get a university degree, so option (iii) is also incorrect.

Suppose the Minimum Time Taken to Get a University Degree