Publication Type
Working Paper
Version
publishedVersion
Publication Date
12-2016
Abstract
We consider a model in which each worker endogenously selects his own type through aprivate investment decision and selects a public signal in the labor market. Signaling thencontributes to social welfare through its influence on the quality choice. We offer a rationalefor the argument that there are too many high-type workers from a welfare perspective,identifying circumstances under which separating equilibrium generates too many high-typeworkers while having to use the incentive-compatible signal and treat high-type workersdifferently in the market. The inefficiency can then be reduced in pooling equilibrium.
Discipline
Labor Economics
Research Areas
Applied Microeconomics
First Page
1
Last Page
24
Citation
LEE, Gea M. and YOO, Seung Han.
Endogenous quality choice, signaling, and welfare. (2016). 1-24.
Available at: https://ink.library.smu.edu.sg/soe_research/2083
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.