Job Market Signaling: An Active Learning Approach for Teaching Education and Employment Available to Purchase

Economics classrooms are typically teacher-centered, textbook-driven, and often dominated by chalk-and-talk methodology. This paper advocates for an active learning approach and offers a lesson plan for key concepts. More specifically this lesson uses the economic concept of job market signaling to teach important economic content. Job market signaling is a process that matches workers and employers within labor markets. It occurs when potential employees convey information about their productivity to employers through academic credentials. An academic credential—for example, a college degree—conveys information valuable to both parties. It benefits the employer by indicating job skills and productivity; it benefits the employee because it increases the likelihood of gaining employment at higher wages. Earning academic credentials, thus, is important for success in the labor market. For this reason, it is a useful concept to teach students. By participating in a simulated competitive labor market as employers and potential employees, students learn about the links between education, productivity, income, and employment. As potential employees in this exercise have varying levels of education, this lesson also conveys important information for students concerning their own decisions about pursuing post-secondary education.