The big sort: College reputation and labor market outcomes

W. Bentle MacLeod, Evan Riehl, Juan E. Saavedra, Miguel Urquiola

Research output: Contribution to journalArticlepeer-review

57 Scopus citations

Abstract

We 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.

Original languageEnglish (US)
Pages (from-to)223-261
Number of pages39
JournalAmerican Economic Journal: Applied Economics
Volume9
Issue number3
DOIs
StatePublished - 2017
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • General Economics, Econometrics and Finance

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