University Competition, Grading Standards, And Grade Inflation
AbstractWe develop a model of strategic grade determination by universities distinguished by their distributions of student academic abilities. Universities choose grading standards to maximize total wages of graduates. Job placement and wages hinge on a ï¬rmâs productivity assessment given a studentâs university, grade and productivity signal. We identify conditions under which better universities set lower grading standards, exploiting the fact that ï¬rms cannot distinguish between âgoodâ and âbadâ âAâs. In contrast, a social planner sets stricter standards at better universities. We show how increases in skilled jobs drive grade inï¬ation, and determine when grading standards fall faster at better schools.
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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 51 (2013)
Issue (Month): 3 (07)
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Other versions of this item:
- Popov, Sergey V. & Bernhardt, Dan, 2010. "University Competition, Grading Standards and Grade Inflation," MPRA Paper 26461, University Library of Munich, Germany.
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
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