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A Question of Degree: The Effects of Degree Class on Labor Market Outcomes

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  • Andy Feng
  • Georg Graetz

Abstract

How does measured performance at university affect labor market outcomes? We show that degree class - a coarse measure of student performance used in the UK - causally affects graduates' industry and hence expected wages. To control for unobserved ability, we employ a regression discontinuity design that utilizes rules governing the award of degrees. A First Class (Upper Second) increases the probability of working in a high-wage industry by thirteen (eight) percentage points, and leads to three (seven) percent higher expected wages. The results point to the importance of statistical discrimination, heuristic decision making, and luck in the labor market.

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  • Andy Feng & Georg Graetz, 2013. "A Question of Degree: The Effects of Degree Class on Labor Market Outcomes," CEP Discussion Papers dp1221, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1221
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    More about this item

    Keywords

    High skill wage inequality; regression discontinuity design; statistical discrimination;
    All these keywords.

    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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