Sunday, September 26, 2010

High School Dropout Signaling Model

A comment I posted on EconLog, "Educational Signaling and Statistical Discrimination" by Bryan Caplan:
Any signaling model of education has to explain the very low comparative unemployment rate for Asian high school dropouts.

Blacks, Hispanics and Whites all show downward sloping unemployment rates as education levels increase. Asians show a relatively flat, low unemployment rate for all educational levels.

Asian high school dropouts have an unemployment rate that is 40 percent of Blacks and 60 percent of Hispanics and Whites' high school dropout unemployment rates.

See unemployment chart towards end of article on the Chronicle of Education, "Education Pays, but How Much?" by Beckie Supiano at the following web link:

Furthermore, there are two types of high school dropouts. Those that upon entering high school are expected to graduate and those that upon entering are expected to dropout.

The expected to dropout group obviously have predictive negative characteristics of a high school dropout, alcohol and drug abuse and/or behavioral problems, which make them potentially and likely poor workers.

The expected to graduate group dropouts for non-predictive reasons, such as an unexpected loss of emotional or economic parental support, would make good, cheap workers. One would think the employment market would find a way to identify this subgroup. Whether Asians are the market response to signaling, I do not know since I have not seen data on Asian high school dropout characteristics. Asians generally have the lowest dropout rate of the ethnic groups.

Also, although I cannot find a link, European dropouts who come to the US do very well finding jobs that pay well. The reason often stated for the success of European high school dropouts is that in Europe they do not dropout due to drug use, alcohol abuse, teen pregnancy or behavioral problems as is common in the US for high school dropouts.
Also see my earlier post, "The Unemployment Rate For Asian High School Dropouts Is 40 To 60 Percent Lower Than Other Racial Groups."

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