The sheepskin effect represents an application of the signaling model of economics, explains economist Jeffrey M. Perloff. The signaling model suggests that some signal -- in this case, a college degree -- confers greater value on a commodity -- in this case, a prospective employee. Writing for the National Association of Scholars, Tom Wood calls it a form of “credentialing effect,” which is a slightly different reason for employers assigning value to a college degree. In this model, employers use applicants’ degree status as a way to screen them, without regard to the intrinsic value, if any, of the degree. The sheepskin effect has led to considerable criticism of the academic establishment and the way degrees are used in hiring.