Education level becomes key signal for worker ability and wage potential.
The article explores how workers use their education level as a signal of their ability in the job market. Firms can't directly see a worker's ability, but they can see their education level. The study shows that workers with higher abilities tend to choose higher education levels, which leads to different wages based on education. This means education can act as a signal of a worker's ability, even if education itself doesn't directly affect job performance.