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In the signaling model, assume high school graduates are paid a stream of income whose present value ...

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In the signaling model, assume high school graduates are paid a stream of income whose present value ...

In the signaling model, assume high school graduates are paid a stream of income whose present value is $200,000. College graduates are paid a stream of income whose present value is X. College education costs higher-productivity workers $50,000 and lower-productivity workers $150,000. What value of X will cause higher-productivity workers to go to college and lower-productivity workers to not go to college?
A) $225,000
B) $475,000
C) $700,000
D) $275,000

Textbook

Modern Labor Economics: Theory and Public Policy

Edition: 12^th

Authors: Ehrenberg, Smith

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