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Suppose 40% of all potential workers are highly skilled and contribute $50,000 to the firm each year. The remaining 60% of potential workers are less-skilled and contribute only $30,000 to the firm each year. Schooling costs a highly skilled worker y per year, while it costs a less-skilled worker 2y per year. What range of y will support a signaling equilibrium?

Microeconomics, Economics

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