Some Consequences of Low-Quality Schooling under Asymmetric Information

The substantial failure of many public programmes intended to increase job opportunities of youth via better education and training has been ascribed mainly to quantitative factors like mismatching or insufficient funds This paper takes a different perspective and concentrates on qualitative aspects It proposes a simple analytical scheme designed to study the consequences of low quality education on the performance of the policy created educational organisations under asymmetric information The model considers two types of schools (high quality H and low quality B) and asks whether there is any room left for the low quality one It is found that an adverse selection process may start within the pool of applicants to school B even under very favourable demand conditions and that any worsening of these conditions lowers the equilibrium average quality of type B graduates Eventually the market for type B certificates may disappear