Question

1. Provide, in your own words, two arguments in favor of the human capital model.

2. Provide, in your own words, two arguments in favor of the signaling model.

3. Which argument did you find to be the strongest? Discuss the evidence that you feel is most convincing. Why?

Answer 1

1. Two arguments in favor of human capital model:

a) Helps policymakers to evaluate the relationships between education and training as inputs and economic and social benefits as outputs. Empirical evidences suggest that higher education contributes to higher individual wages & salaries, GDP growth, higher civic participation rate, lower crime rates, and better health outcomes.

b) Helps in  incentivization of individuals’ investment in their own education with policies like student loan and dual enrollment programs

2. Two arguments in favor of signaling model:

a) It enables the prospect employers & firms to draw inferences about unobserved characteristics of prospect employee, based on the schooling or work experience of prospect employee, or on direct measures of some aspects of job performance.

b) Focusses on credible signals and helps realization of true worth of service based on credible signals.

3. The arguments in favor of signaling model is found to be strongest. Mere acquisition of degress & diplomas does not help develop the required skillsets that is required for actual business problem solving.

The requirement for acquisition of certification of higher education is passing of exams. This can be done in academic setting. Students may mug-up the articles and write exams. This does not show that the students has actually understood the learning stuffs. Many a time in course of attainment of higher education, students tends to acquire knowledge the way they are. Such knowledge may be theoritical and does not relate to any incentive to earn while one learn. The students tend to become jack of so many information that has not been processed well in time.