(Sakamoto and Kim, 2006). According to market signaling theory, a PhD program will
convey a stronger productive skills signal than a master degree. Thus, a PhD program
has a higher monetary value. With the same reasoning, an advanced degree has a
much higher monetary value than a training program.
This formulation is highly relevant for recruitment since firms suffer from strong
information asymmetry with regard to prospective workers. So, when it comes to
recruiting, companies resort to educational achievements as a signal of prospective
workers human capital. As for staff already in post, firms have a lot more information
and can therefore properly assess staff’s skills and abilities. Training programs are
therefore deemed best suited to develop employees’ human capital: those programs can
be designed to fit employees’ job specific training needs.