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Grade Inflation, Social Background, and Labour Market Matching

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  • Schwager, Robert

Abstract

A model is presented where workers of differing abilities and from different social backgrounds are assigned to jobs based on grades received at school. It is examined how this matching is affected if good grades are granted to some low ability students. Such grade inflation is shown to reduce the aggregate wage of the lower class workers because employers use social origin as a signal for productivity if grades are less than fully informative. Moreover, the high-ability students from the higher class may benefit from grade inflation since this shields them from the competition on the part of able students from the lower classes.

Suggested Citation

  • Schwager, Robert, 2008. "Grade Inflation, Social Background, and Labour Market Matching," ZEW Discussion Papers 08-070, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:7393
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    File URL: https://www.econstor.eu/bitstream/10419/24766/1/dp08070.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alessandro Tampieri, 2016. "Social background effects on school and job opportunities," Education Economics, Taylor & Francis Journals, vol. 24(5), pages 496-510, September.
    2. A. Tampieri, 2011. "Students' Social Origins and Targeted Grade Inflation," Working Papers wp801, Dipartimento Scienze Economiche, Universita' di Bologna.
    3. Bauer, Thomas K. & Grave, Barbara S., 2011. "Performance-related Funding of Universities: Does More Competition Lead to Grade Inflation?," IZA Discussion Papers 6073, Institute of Labor Economics (IZA).
    4. repec:zbw:rwirep:0288 is not listed on IDEAS
    5. Thomas K. Bauer & Barbara S. Grave, 2011. "Performance-related Funding of Universities – Does more Competition Lead to Grade Inflation?," Ruhr Economic Papers 0288, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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    More about this item

    Keywords

    education; grading; standards; assignment; social mobility; grading; standards; assignment; social mobility;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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