hjælp

Education is a continuous variable, where eh is the years of schooling of a high-ability worker and el is the years of schooling of a low-ability worker. The cost per period of education for these types of workers is ch and cl , respectively, where cl > ch. The wages they receive if employers can tell them apart are wh and wl. If they don’t work, their wage is equal to 0.

Under what conditions is a separating equilibrium possible? How much education will each type of worker get?

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