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Grade inflation, social background, and labour market matching


  • Schwager, Robert


A model is presented where workers of differing abilities and from different social backgrounds are assigned to jobs based on grades received at school. It is examined how this matching is affected if good grades are granted to some low-ability students. Such grade inflation is shown to reduce the aggregate wage of the lower class workers because employers use social origin as a signal for productivity if grades are less than fully informative. Moreover, the high-ability students from the higher class may benefit from grade inflation since this shields them from the competition on the part of able students from the lower classes.

Suggested Citation

  • Schwager, Robert, 2012. "Grade inflation, social background, and labour market matching," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 56-66.
  • Handle: RePEc:eee:jeborg:v:82:y:2012:i:1:p:56-66
    DOI: 10.1016/j.jebo.2011.12.012

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    References listed on IDEAS

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    Cited by:

    1. Lucifora, Claudio & Tonello, Marco, 2015. "Cheating and social interactions. Evidence from a randomized experiment in a national evaluation program," Journal of Economic Behavior & Organization, Elsevier, vol. 115(C), pages 45-66.

    More about this item


    Education; Grading; Standards; Assignment; Social mobility;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory


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