Caplan's theory of signaling

Caplan's theory of signaling, based on economic principles, suggests that individuals acquire education and certifications not just for skills but to signal their abilities to employers. These signals help differentiate themselves in the job market, reducing information asymmetry where employers can't easily assess actual competence. For example, obtaining an advanced degree may indicate higher intelligence, discipline, or commitment, which hiring managers interpret as valuable traits. Thus, education functions as a costly signal, helping qualified candidates stand out and assisting employers in identifying suitable workers efficiently.