Some economists maintain that the returns to additional years of education is actually quite small but that there is a substantial "sheepskin" effect whereby one receives a higher salary with the successful completion of degrees or the earning of diplomas (i.e., sheepskins).

a. Explain how the sheepskin effect is analogous to a signaling model.

b. Typically in the United States, a high school diploma is earned after 12 years of schooling while a college degree is earned after 16 years of school.