In Question 5.2, under what conditions is a pooling equilibrium possible? Data From Question 5.2:- Education is
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In Question 5.2, under what conditions is a pooling equilibrium possible?
Data From Question 5.2:-
Education is a continuous variable, where \(e_{b}\) is the years of schooling of a high-ability worker and \(e_{l}\) is the years of schooling of a lower-ability worker. The cost per period of education for these types of workers is \(c_{b}\) and \(c_{l}\), respectively, where \(c_{l}>c_{b}\). The wages they receive if employers can tell them apart are \(w_{h}\) and \(w_{l}\). Under what conditions is a separating equilibrium possible? How much education will each type of worker get?
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