The Impact of University Reputation on Employment Opportunities: Experimental Evidence from Bolivia

Access to universities is increasing, particularly in developing countries, which has the potential to improve prospects for employment opportunities and human development. However, the transition mechanisms from university to the workplace are complex due to informational frictions. Recruiters perceptions and interpretations of applicants observable educational credentials play a crucial role in labour sort and matching processes. These perceptions are tightly linked to university reputation, which shapes recruiters expectations of applicants performance at the workplace, and thus critically affects their choices. We prove this empirically based on a two-branch correspondence experiment in Bolivia. We sent 2848 fictitious CVs to 1424 formal firms in the three main urban Bolivian areas applying for an internship and found a large university reputation premium: applicants from well-valued universities from the recruiters viewpoint are around 40% more likely to receive a positive response 2.25 percentage points advantage from a 7.87% baseline likelihood. Under these circumstances, a university degree becomes a necessary but insufficient asset for good quality employment.