- Signaling vs. human capital theories. In signaling theory, Spencer’s argument is that achievement of valid credentials is a crucial signal to an employer about a potential employee’s productivity. In this theory, education is taken as an individual’s effort regardless of the cost of attaining the credentials. In that respect, Spencer makes fundamental assumptions with one being that job vacancies require the prospective employees to have a certain set of skills and personality. In addition, Spencer classifies the pools of skills into two categories of good and bad, with good indicating a pool with potential for high productivity and ...
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