Y5

(Signaling) There are three types of workers, type I, 2, and 3, whose marginal prod- ucts are 340, 380, and 8100 reSpectively. The fraction of each type is 1/3. Employers observe only the worker's level of education, not his type, and pay the expected mar ginal product given their observations. Workers only care about the salary they get minus the cost of the education. The cost of education for a type 1 is 320 per year, for a type 2 is 810 per year, and for a type 3 is 35 per year. (a) Fully describe a pooling equilibrium in which all three types of workers obtain the same level of education. (b) Is there a pooling equilibrium in which all three tytpes of workers obtain 2 years of education? Explain. (c) Fully describe a completely separating equilibrium in which three types of workers choose three different levels of education. (d) Is there a completely separating equilibrium in which a type III worker obtains 3 years of education? Explain. (e) Fully describe a partially separating equilibrium in which the workers of type I and II obtain no education, and a type III worker obtains some education