The Earnings Returns to Graduating with Honors: Evidence from Law Graduates

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Abstract: This paper studies the causal effects of graduating from university with an honors degree on subsequent earnings. While a rich body of literature has focused on estimating returns to human capital, few studies have analyzed returns at the very top of the education distribution. We highlight the importance of honors degrees for future labor market success in the context of German law graduates. Using a difference-in-differences research design combined with entropy balancing, we find that students of law who passed the state bar exam with an honors degree receive a significant earnings premium of about 14 percent. The results are robust to various sensitivity analyses. Terms of use: Documents in Keywords:returns to education, difference-in-differences, entropy balancing, law graduates, earnings JEL classification: J01, J31, J44 Acknowledgments: We thank Michael Bahrs, Iwan Barankay, Bernt Bratsberg, Frederic Döhl, Bart Goldsteyn, Luise Görges, Peter Haan, Daniel Hamermesh, Katja Maria Kaufmann, Olivier Marie, Aderonke Osikominu, M. Daniele Paserman, Annemarie Paul, Petra Persson, Torsten Santavirta, Guido Schwerdt, Gesine Stephan and Niels Westergaard-Nielsen and numerous seminar and conference participants for helpful comments and suggestions. We also thank the DZHW and, in particular, Gregor Fabian, Thomas Lewerenz, Ulrich Prigge and Torsten Rehn at DZHW for providing access to the graduate survey data and for all their support. The usual disclaimer applies.

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