Better educated workers may earn higher wages for two possible reasons: because they acquire more skills or because more education signals their intellect and enthusiasm. Economists believe that signalling plays a role and worry that this may cause overeducation. Georg Graetz writes that signalling may lead students to invest less effort into acquiring skills than they would if employers had perfect information about their abilities.

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31 July 2023

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LSE Business Review

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https://blogs.lse.ac.uk/businessreview/2023/07/31/more-education-signals-ability-to-employers-but-does-it-really-improve-skills/

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