4-3 - Earnings College grad High school grad Age On the job...

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P. value of lifetime earnings C (educational cost for less productive B’s) PVE 2 B O PVE 1 A C/2 (educational cost for the more Productive A’s) F e* Years of education past high school For the alphas, the net game for e* years of education is BF. Since BF > OA, they should invest. Signaling is effective when less education is less productive How much of education is signaling? Helpful hints: Chap 7- read book Wage Age Equilibrium labor supply and demand in two markets wage Se Sw W*e W*w De Dw
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We>Ww Earnings College grad High school grad Age College grads peak because there’s more on-the-job learning going on and it’s easier to train younger people than older
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Unformatted text preview: Earnings College grad High school grad Age On the job training: Women may invest less in OJT b/c they drop out for children Why are graduation rates of athletes so abysmal?-they aren’t. in premier schools, athletes have the same graduation rates as other students and in crappy schools, there’s overall low levels of graduation rates. 1. Human capital explanation. There id a monetary gain from persisting to graduation There is a monetary cost from persisting to graduation If (Pval of gain – Pval of cost) > 0 then persist graduation 2. Empirical test for football...
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