SIGNALING MODELS

Consider a labor market for men and women with two types of workers in each group, high ability (H types), and low ability (L types). H types among men and women have a productivity of 70 and L types among men and women have a productivity of 30. Among women 2/3rds are H types, and 1/3rd are L types, and among men are H types, and L types. Suppose employers have distaste towards H type women, but not towards L type women. In a world where college is a possibility (with the same costs as above), what might happen to college attendance and wages for women?

• Depending on the level of distaste, H type women might still go to college
• The wage gap between L and H type women will go down
• Employer distaste raises the cost of going to college for women, so fewer of them will go to college
• Depending on the level of distaste, women may not go to college at al