Remember the puzzle where nations don’t get as much value out of school as individual students do? Well the signaling model explains why. The more school is about credentialing (rather than learning), the less the nation as a whole stands to benefit from more years of it. If only a small amount of useful learning takes place, then sending every citizen to an extra year of school will result in only a small increase in the nation’s overall productivity. Meanwhile, when you’re an individual student within a nation, getting more school can substantially increase your future earnings—not because
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