Graduation tells employers, “I take social norms seriously—and have the brains and work ethic to comply.” Quitting tells employers, “I scorn social norms—or lack the brains and work ethic to comply.” If you graduate, the signaling model says the market will lump you with the winners and pay you a special diploma bonus—often called a “sheepskin effect” because diplomas used to be printed on sheepskin. If you quit, the signaling model says the market will lump you with the losers and withhold the sheepskin’s reward. After all, employers won’t know why you failed to finish your degree. They’ll
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