Job market signals and signs

Under two-dimensional asymmetric information, education is a noisy job-market signal, so supplementary information is needed to determine a worker’s ability. On-the-job interaction reveals a worker’s productivity to the employer. Signs like employment relationships or promotions may reveal this private information to the market. Un-like signals, a worker does not voluntarily select signs. We analyze in particular one sign, employment relationships, finding they only lead to public revelation of productivity if wages are sticky. When job-market signs are noisy, education is valuable for high-ability workers as a life-time job market signal