Consider a hypothetical graduate job market in which a certificate does not improve productivity. High-productivity graduates find it cheaper to obtain than low-productivity graduates. How can the certificate support a separating equilibrium?

Question

Answer

Employers must already observe each graduate's productivity perfectly

Answer

All graduates must choose the certificate

Answer

The wage gain can exceed the high type's cost while remaining below the low type's cost

Answer

The certificate must increase every graduate's productivity

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Consider a hypothetical graduate job market in which a certificate does not impr...

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