Reference no: EM132407253

Suppose we know the following: In 2015, the typical high school dropout earned $35,256 per year, the typical high school graduate earned $35,256 per year, and the typical college graduate earned $59,124 per year.

We may conclude that: <bold/underline the right answer>

(a) Education and earnings are not at all related to each other.

(b) Education necessarily makes people more productive on the job and this explains why people with more education earn more money.

(c) Education and earnings rise together (people with more education tend to earn more money), but increased education may not be causing earnings to increase; it is possible that increases in both education and earnings result from the effects of yet a third factor.

(d) The evidence above implies that college is always a good investment for everyone. Maybe college graduates earn more because college makes them more productive. Maybe they earn more because college signals higher ability, but either way, everyone should go to college given the evidence above.