Choosing a Field of Education: Signaling, Mismatch, and Equilibrium Shifting
In this paper the author reviews a well-known model of job market signaling through education, extending it to a choice of a field of study. In the theoretical part, she extends the classic model, by analyzing a game of education choice with continuum types of agents and discrete space of efforts,...
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| Format: | Article |
| Language: | English |
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Polish Economic Society
2022-01-01
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| Series: | Ekonomista |
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| Online Access: | https://ekonomista.pte.pl/Choosing-a-Field-of-Education-Signaling-Mismatch-and-Equilibrium-Shifting,150164,0,2.html |
| Summary: | In this paper the author reviews a well-known model of job market signaling through education, extending it to a choice of a field of study. In the theoretical part, she extends the classic model, by analyzing a game of education choice with continuum types of agents and discrete space of efforts, which is here interpreted as a field of study at the university level. In the second part, the author provides a simple numerical exercise to show how policy changes may influence the equilibrium. This exercise is used in the context of observed overeducation in the Polish labor market. Given the data on recent alumni’s field of study and professional career, the author calibrates a stylized disutility function that would rationalize the choices within a signaling model with inelastic demand and some unobserved frictions. Then, she provides a simple illustrative argument on how an intervention by a better-informed social planner may shift the equilibrium. The author argues that overeducation may arise if the cost of getting a diploma is too small; this can lead to an over-supply of university graduates as compared with the labor market demand. |
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| ISSN: | 0013-3205 2299-6184 |