Which theory does the best job of explaining why educated people are paid more than uneducated people
A)the human-capital and price-fixing theories
B)the human-capital and signalling theories
C)the wage-differential and common-demand theories
D)the cost-allocation and derived-demand theories

Question

Quizplus · Accepted Answer

The human-capital theory suggests that education and training increase an individual's productivity, which leads to higher wages. The signalling theory suggests that education serves as a signal to employers of an individual's abilities and work ethic, leading to higher wages. Both of these theories explain why educated people are paid more than uneducated people, making choice B the best answer. The other choices are either incomplete or not directly related to the question at hand.

Which Theory Does the Best Job of Explaining Why Educated