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The effect of graduating with honors on earnings

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  • Khoo, Pauline
  • Ost, Ben

Abstract

We provide the first estimate of the effect of graduating with honors on the earnings of recent college graduates. To help distinguish between the causal effect of honors and unobservables correlated with obtaining honors, we use a regression discontinuity design that exploits the fact that Latin honors such as cum laude are determined based on strict GPA cutoffs. We test for and find no evidence of students manipulating their GPA in order to obtain honors. Honors provides an earnings benefits for the first two years following graduation but this benefit disappears by the third year after graduation. This provides among the first pieces of evidence that firms respond to signals at the higher education level.

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  • Khoo, Pauline & Ost, Ben, 2018. "The effect of graduating with honors on earnings," Labour Economics, Elsevier, vol. 55(C), pages 149-162.
    • Handle: RePEc:eee:labeco:v:55:y:2018:i:c:p:149-162
    DOI: 10.1016/j.labeco.2018.05.012
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    1. Stijn Baert & Dieter Verhaest, 2021. "Work Hard or Play Hard? Degree Class, Student Leadership and Employment Opportunities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(4), pages 1024-1047, August.
    2. Georg Graetz, 2023. "Imperfect Signals," CESifo Working Paper Series 10403, CESifo.
    3. David Boto-García & Marta Escalonilla, 2022. "University education, mismatched jobs: are there gender differences in the drivers of overeducation?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(3), pages 861-902, October.
    4. Busso, Matias & Montaño, Sebastián & Muñoz-Morales, Juan S., 2023. "Signaling Specific Skills and the Labor Market of College Graduates," IZA Discussion Papers 16449, Institute of Labor Economics (IZA).
    5. Graetz, Georg, 2023. "Imperfect Signals," IZA Discussion Papers 16104, Institute of Labor Economics (IZA).
    6. Gong, Jie & Pan, Jessica, 2023. "The returns to an additional year of education for college graduates," Journal of Public Economics, Elsevier, vol. 218(C).
    7. Graetz, Georg, 2023. "Imperfect signals," Working Paper Series 2023:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    8. Atay, Salim & Asik, Gunes A. & Tumen, Semih, 2023. "Impact of Graduating with Honors on Entry Wages of Economics Majors," IZA Discussion Papers 16080, Institute of Labor Economics (IZA).
    9. Busso, Matías & Montaño, Sebastián & Muñoz-Morales, Juan S., 2023. "Signaling Specific Skills and the Labor Market of College Graduates," IDB Publications (Working Papers) 12720, Inter-American Development Bank.
    10. Georg Graetz, 2021. "On the interpretation of diploma wage effects estimated by regression discontinuity designs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 228-258, February.

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