Many countries use college-major-specific admissions policies that require a student to choose a college-major pair jointly. Given the potential of student-major mismatches, we explore the equilibrium effects of postponing student choice of major. We develop a sorting equilibrium model under the college-major-specific admissions regime, allowing for match uncertainty and peer effects. We estimate the model using Chilean data. We introduce the counterfactual regime as a Stackelberg game in which a social planner chooses college-specific admissions policies and students make enrollment decisions, learn about their fits to various majors before choosing one. Our estimates indicate that switching from the baseline to the counterfactual regime leads to a 1% increase in average student welfare and that it is more likely to benefit female, low-income and/or low-ability students.
This paper investigates whether firms use university prestige to statistically discriminate among college graduates. The test is based on the employer learning literature which suggests that if firms use a characteristic for statistical discrimination, this variable should become less important for earnings determination as a worker gains labor market experience. In this framework, we use a regression discontinuity design to estimate a 19% wage premium for recent graduates of two of the most selective universities in Chile. However, we find that this premium decreases by 3 percentage points per year of labor market experience. These results suggest that employers use college selectivity as a signal of workers' quality when they leave school. However, as workers reveal their productivity throughout their careers, they become rewarded based on their true quality rather than the prestige of their college.
This paper investigates whether firms use university prestige to statistically discriminate among college graduates. The test is based on the employer learning literature which suggests that if firms use a characteristic for statistical discrimination, this variable should become less important for earnings determination as a worker gains labor market experience. In this framework, we use a regression discontinuity design to estimate a 19% wage premium for recent graduates of two of the most selective universities in Chile. However, we find that this premium decreases by 3 percentage points per year of labor market experience. These results suggest that employers use college selectivity as a signal of workers' quality when they leave school. However, as workers reveal their productivity throughout their careers, they become rewarded based on their true quality rather than the prestige of their college.
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