Influence of Student's Ability School Estimation on Future Success in the Labour Market

Student: Shoiko Aleksandr

Educational Programme: Applied Economics (Master)

Year of Graduation: 2020

The paper proposes a novel modification of the discrete job-market signaling model developed by M. Spence. This modification introduces a new player, a school teacher, who knows the true ability of a student. The student does not know his own abilities and evaluates them on the base of the signal received from the teacher during school education. Then he may choose the level of higher education which in turn influence his future wage, as in Spence model. The research interest is in the analysis of the signal transformation throughout the game and how it affects the choice of the university and wage after graduation. As a result, sequential equilibria in pure strategies for the constructed game were found by using the backward induction method, and a meaningful interpretation of the obtained equilibrium is given.

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