Q3. The distinction between policy implications of human capital and signalling
ID: 1134185 • Letter: Q
Question
Q3. The distinction between policy implications of human capital and signalling models arises because while schooling model assumes a positive correlation between years of schooling and earnings it is not the case for the signalling model. (18 points)
True/False/ Uncertain and explain why ?
Q4. Price does not influence healthcare utilisation decisions. (18 points)
Q5. Lifestyle is a very important determinant of health, but it does not necessarily mean that public health campaigns aiming at improving individuals’ lifestyle are effective in improving health. (18points)
Explanation / Answer
Q3. The distinction between policy implications of human capital and signalling models arises because while schooling model assumes a positive correlation between years of schooling and earnings it is not the case for the signalling model. (18 points)
True/False/ Uncertain and explain why ?
Answer: Yes, because both these models are based on different assumptions.
Human capital theory assumes that more the number of years of schooling and education, higher will be the wages. They also assume that more numbers of education increase the productivity and hence the wages increase.
Signaling model proposes that it reflects positive correlaation between education and unobserved ability. Higher ability individuals increase their education to signal their ability to employers, and hence there wages increase. Hence education in this theory is not important for producticity.
Both these theories have encouraged research and It is observed in one of the research that less the number of years of schooling, lesser are the wages. It may be due to education and formal degree convinces employer about productivity and wages paid are higher.
Reference: Signaling Vs Human capital By Carolina Arteaga .
Q.4 and Q. 5 : Kindly provide relevent cases or give clear guideline what is to be written as an answer.
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