Disadvantages Of The Signalling Theory

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Signalling theory was proposed by Michael Spence which says that people are selected by their innate abilities and the educational levels they have attained as the theory says that abilities shown by educational levels signal that a particular man/women has good abilities and is eligible and so the consequence of this is that the more the educated the more the salary he/she gets.
Signalling theory is based in two assumptions firstly individuals have different innate abilities of productivity , secondly additional educational levels invites more costs which differ for low or high productivity worker meaning the people who learn fast incur less costs but those who are not able to learn fast incur more educational costs. In the signalling theory the potential of any person cannot be seen so the only factor a person can be judged is the educational level and so it is inferred that one who has more productivity levels has more of productivity. The main disadvantage of this is that in order to show that he or she is more productive they have to get more education which as discussed in ear...

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