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dc.contributor.authorArozamena, Leandro
dc.contributor.authorRuffo, Hernán
dc.coverage.spatialAmérica Latina y el Caribeen_US
dc.identifier.citationArozamena, L., & Ruffo, H. (2016, June). Education, Signaling and Mismatch. Working paper;N° 2016/03, Buenos Aires: CAF. Retrieved from
dc.description.tableofcontentsWe assess the importance education as a signal of workers skills and the e¤ects of poor signaling quality on labor market outcomes. We do so by merging a frictional labor market model with a signaling setup where there is a privately observed idiosyncratic component in the cost of education. Given that highly skilled workers cannot correctly signal their abilities, their wages will be lower and they will not be matched to the "right" vacancies, or may be unemployed. Skilled workers will then have lower incentives to move to high productivity markets. Furthermore, fewer vacancies will be created in labor markets where skills matter, and incentives for workers to invest in education will be lower. Overall, an economy where education is a noisier signal generates lower educational attainment, higher unemployment and lower productivity. In addition, we provide evidence suggesting that education plays a poor signaling role in Latin American countries. We then calibrate our model using Peruvian data, and through a quantitative exercise we show that this mechanism could be relevant to explain the relatively bad performance of labor markets in Latin American countries.en_US
dc.relation.ispartofseriesWorking paper;N° 2016/03
dc.subjectTrabajo y protección socialen_US
dc.subjectInvestigación socioeconómicaes_ES
dc.titleEducation, Signaling and Mismatchen_US
dc.publisher.cityBuenos Airesen_US

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