The Big Sort: College Reputation and Labor Market Outcomes†

The Big Sort: College Reputation and Labor Market Outcomes† AbstractWe explore how college reputation affects the “big sort,” the process by which students choose colleges and find their first jobs. We incorporate a simple definition of college reputation—graduates' mean admission scores—into a competitive labor market model. This generates a clear prediction: if employers use reputation to set wages, then the introduction of a new measure of individual skill will decrease the return to reputation. Administrative data and a natural experiment from the country of Colombia confirm this. Finally, we show that college reputation is positively correlated with graduates' earnings growth, suggesting that reputation matters beyond signaling individual skill. (JEL I23, I26, J24, J31) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Applied Economics American Economic Association

The Big Sort: College Reputation and Labor Market Outcomes†

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Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
1945-7790
D.O.I.
10.1257/app.20160126
Publisher site
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Abstract

AbstractWe explore how college reputation affects the “big sort,” the process by which students choose colleges and find their first jobs. We incorporate a simple definition of college reputation—graduates' mean admission scores—into a competitive labor market model. This generates a clear prediction: if employers use reputation to set wages, then the introduction of a new measure of individual skill will decrease the return to reputation. Administrative data and a natural experiment from the country of Colombia confirm this. Finally, we show that college reputation is positively correlated with graduates' earnings growth, suggesting that reputation matters beyond signaling individual skill. (JEL I23, I26, J24, J31)

Journal

American Economic Journal: Applied EconomicsAmerican Economic Association

Published: Jul 1, 2017

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