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Question 8, Text Exercise 5.5 N HW Score: 86.36%, 9.5 of 11 points Part 2 of 2 @ Points: 0.5 of 1 Education is a
Question 8, Text Exercise 5.5 N HW Score: 86.36%, 9.5 of 11 points Part 2 of 2 @ Points: 0.5 of 1 Education is a continuous variable, where e, is the years of schooling of a high-ability worker and e, is the years of schooling of a low-ability worker. The cost per period of education for these types of workers is , and , respectively, where , > ;,. (Thus, high- and low-ability people are able to obtain education.) The wages they receive if employers can tell them apart are w;, and w;. Under what conditions is a separating equilibrium possible? A separating_equilibrium is when G~ %, G~ Ch Wh e > . Wh W WhW >eh> Ch q >eh>ch. Wh~W) >e >0, g h How much education will each type of worker get? High-ability people will obtain OA. Wh - W Wh - W - + 1 years of education and low-ability people will obtain + 1 years of education. Ch OB. Wh - W + 1 years of education and low-ability people will obtain no education. C1 O c. Wh - W - 1 years of education and low-ability people will obtain no education. Ch OD. Wh - WI Wh - W years of education and low-ability people will obtain years of education. Ch OE. Wh - W + 1 years of education and low-ability people will obtain 1 year of education. C1
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