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Higher Education Non-Completion, Employers, and Labor Market Integration: Experimental Evidence

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  • Neugebauer, Martin
  • Daniel, Annabell

Abstract

Theories of job assignment suggest that employers give a lot of weight to achieved educational credentials. But what if credentials are missing? We theorize how college non-completion affects the hiring chances, identify its causal effect in different labor market segments, and assess which factors facilitate labor market entry for dropouts. Based on a simulated hiring process with N = 1,382 German employers who rated more than 10,000 fictitious CVs, we show that college non-completion is not a scar per se, but rather depends on the educational attainment of the competitors who constitute the labor queue, and on the degree of occupational closure which varies on a granular level between firms that hire for the same occupations. We also find that employers, when rating dropouts, attach most value to CV attributes that signal a high stock of job-relevant skills, such as good performance during college or an occupation-specific internship. We conclude by discussing implications of our work for research on the labor market integration of dropouts.

Suggested Citation

  • Neugebauer, Martin & Daniel, Annabell, 2021. "Higher Education Non-Completion, Employers, and Labor Market Integration: Experimental Evidence," SocArXiv evm74, Center for Open Science.
  • Handle: RePEc:osf:socarx:evm74
    DOI: 10.31219/osf.io/evm74
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    References listed on IDEAS

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