Fraternities and Labor-Market Outcomes

Abstract

We model how student choices to rush a fraternity, and fraternity admission choices, interact with signals firms receive about student productivities to determine labormarket outcomes. The fraternity and students value wages and fraternity socializing values. We provide sufficient conditions under which, in equilibrium, most members have intermediate abilities: weak students apply, but are rejected unless they have high socializing values, while most able students do not apply to avoid taint from association with weaker members. We show this equilibrium reconciles the ability distribution of fraternity members at the University of Illinois, and estimate the fraternity's welfare impact on different students.

Old Boys' Clubs and Upward Mobility Among the Educational Elite

“…We highlight how social institutions limited the assimilation of Jews and Catholics into the post-war elite. Our findings help explain the sustained media (McWilliams, 1948;Rimer, 1993;Flanagan, 2016), academic (Zweigenhaft, 1992Marmaros and Sacerdote, 2002;Popov and Bernhardt, 2012), and literary (Fitzgerald, 1920) footprint of final clubs and similar groups, such as secret societies at Yale and eating clubs at Princeton.…”

Estate Taxation and Human Capital With Information Externalities

“…They show that, under certain conditions, discrimination can be a net benefit for the discriminated group by partially alleviating the information externality. With a similar type of information externality, Popov and Bernhardt (2012) show that fraternity membership affects future labor market outcomes when firms cannot perfectly evaluate student productivities. Norman (2003) explicitly investigates the efficiency of statistical discrimination and shows that discrimination can reduce mismatch between workers and jobs.…”

“…They show that, under certain conditions, preferential treatment can actually hurt those it intends to benefit by dampening the incentive to acquire skills and worsening the information externality. Using a similar information externality, Popov and Bernhardt (2012) show that fraternity membership affects labor market outcomes when firms cannot perfectly evaluate the productivities of job applicants. In the same vein, Lockwood (1991) shows that an information externality arises when firms administer tests that imperfectly measure worker productivity to make hiring decisions.…”

Occupational Choice with Endogenous Spillovers

“…We complete our characterization of individual decisions by showing how the benefits of interaction are greater for highly productive workers; this provides a rationalization for the existence of fraternities and elite societies (e.g. Popov and Bernhardt, 2012).…”