The Surprising Importance Of Grades: Sending Signals In The Job Market

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Since the 1970s, economic theorists have wrestled with the problem of education. Aside from learning and self-improvement, their models led them to conclude that the primary reason we go to school is to prove to potential employers that we would be good employees, mostly by getting as much education as possible. Their models said nothing about other types of information, such as grades, letters of recommendation, and other measures of "Reputation."The idea behind signaling is that if I am smart and capable, costly signals like more education are easier for me to attain than if I am dull and incompetent.