Let's make the following change to the model of educational signaling discussed in Section 21.2: Assume that

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Let's make the following change to the model of educational signaling discussed in Section 21.2: Assume that education is more costly for high-ability workers than for low-ability workers (perhaps because those with high ability have more to lose by staying in school). Draw a new figure like Figure 21.6 showing the relationship between the indifference curves of high-ability and low-ability workers. Are there any separating equilibria? Explain your answer using graphs.
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Microeconomics

ISBN: 978-1118572276

5th edition

Authors: David Besanko, Ronald Braeutigam

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