A loyal reader asks me to comment on a recent exchange between Econlog’s Bryan Caplan and economics journalist Noah Smith. Specifically, Noah Smith attacks Bryan for his strong defense of the signaling model of education. The theory asserts that the main reason that education correlates with income is that is a signal of intelligence and work ethic, not learned skills. I.e., employers like college graduates because they are good workers, not because they have useful skills.
Smith calls signaling theory a “fad,” even though the main papers were written by Arrow and Spence decades ago!! He also offers arguments in favor of human capital theory, which deserve their own response and have been debated in the literature. For example, he offers the argument that education provides networks. On this blog, MIT’s Ezra Zuckerman has argued that the overall explanatory power of social networks is weak. UNC’s Ted Muow is…
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Utopia, you are standing in it! 
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