A study shows that, for American high school dropouts, obtaining a General Equivalency Degree (GED) by part-time study after high school has very little payoff. It also shows, however, that for immigrants who did not complete high school in their native c

Signal theory can be used to explain these results. According to signal theory, education acts as a signal to employers, conveying information about a person's abilities and characteristics. For native-born high school dropouts, obtaining a GED may not provide significant signaling value because employers may view it as a remedy for an already poor educational track record. Immigrants, on the other hand, may face greater barriers to employment due to language and cultural differences, and may have less established formal credentials in their home countries. Obtaining a GED signals a willingness to adapt to new environments and to acquire new skills, which may be highly valued by employers in the U.S. job market. Thus, while the same educational achievement may have different signaling value for different groups, signal theory can help explain the varying payoffs experienced by American high school dropouts and immigrant GED earners.