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Compare and contrast in details human capital and signaling models

Compare and contrast in details human capital and signaling models

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Answer #1

HUMAN CAPITAL -

  • This theory states that education can enhance human capital.It will help to increase productivity and increased earnings in the labour market.
  • This theory focuses on higher education.Higher the education higher the productivity.
  • If a person is employed and he want to improve its productivity he has to get higher educational qualification.

SIGNALING MODELS -

  • Signaling theory states that higher education is acting as a signal only.Higher education has nothing to do with your productivity.
  • The inherent human capital will increase productivity and higher wages in employment.
  • This theory says that education is a very expensive and time consuming signal.
  • This theory says that your ability to work,knowledge is the only tool to get higher wages not the higher education.
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