[MattGaiser]

I see it as less about signaling and more about proof.

A long time ago, a high school diploma was rigorous enough that people actually failed. A significant number of people did not earn one. Now, I don't even know of a friend of a friend who has failed to earn one, even if they just kept on retaking the courses at relatively easy schools until they passed.

It isn't clear to me what holding a high school diploma indicates about a person anymore simply because nearly everyone gets one.

What does holding a high school diploma prove?

[satyrnein]

This is what the "signaling arms race" refers to.

The other model, human capital theory, says that a high school diploma proves that the student has acquired specific skills (algebra, European history, etc) and therefore built up human capital. Signaling theory says the specific skills are not the point.

[ikeyany]

Signaling is synonymous with social proof in this context.