Question: Education is a continuous variable, where eh is the years of schooling of a high-ability worker and e. is the years of schooling of a

 Education is a continuous variable, where eh is the years of

Education is a continuous variable, where eh is the years of schooling of a high-ability worker and e. is the years of schooling of a lower-ability worker. The cost per period of education for these types of workers is ch and 0., respectively. The wages they receive if employers can tell them apart are wh and w.. Let 9 be the share of the workers with high ability and suppose cl 5 Ch- Under what conditions is a gparatinguilibrium possible and under what conditions is a pooling equilibrium possible? 0 A. W "\"1 Wu 'WI A pooling equilibrium is not possible, but a separating equilibrium is possible if the education required for Wh is > eh > an O B. 9 Wh 'Wi A separating equilibrium is not possible, but both types of workers will obtain the same amount of education for a pooling equilibrium if the education required is e o

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