(IME2) Chapter 11 - Video 7: Solving for Pooling Equilibria of Spence's Job Market Signaling Model.

[@Nosurf-q5q]

12:35 If education doesn't increase productivity, and in our population of 100 , 50 are productive and 50 unproductive. If everyone gets and education, the productivity split remains the same. So shouldn't the wage be 12.5 only? As firms have no way of knowing who is productive and who unproductive, so they take an expectation of productivity to decide the wage rate?