Abstract

A modified version of Spence’s signaling model is analyzed to explore the relationships among the type composition, career concerns, and signal effort levels chosen by agents. We show that an increase in the proportion of high-type agents does not change an agent’s effort levels monotonically. High signaling efforts are induced when the proportion of the high type is in the middle range. Moreover, when the proportion of the high type is small, career concerns increase the signaling effort levels and have a more positive influence on the effort level of a high-type agent. However, when the proportion of the high type is large, career concerns might instead decrease the effort levels