A diploma can prove talent without teaching any

Michael Spence's 1973 model shows employers can't directly observe an applicant's ability, so they lean on costly signals like a college degree instead. Because earning credentials is cheaper for high-ability people, the credential itself sorts workers by talent even if it taught them nothing new.

— Michael Spence, Job Market Signaling — Quarterly Journal of Economics, Vol. 87, No. 3, 1973