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The signaling value of university rankings: Evidence from top 14 law schools

Matthew Naven and Daniel Whalen

Economics of Education Review, 2022, vol. 89, issue C

Abstract: This paper measures the impact of signaling on labor-market outcomes by estimating the labor-market effects of attending a U.S. News & World Report Top 14 (T14) law school. Utilizing data from the American Bar Association on class profiles, we use the value added with drift methodology to estimate the causal impact of attending a particular law school and then use a regression discontinuity methodology to estimate the difference in value added between T14 and non-T14 law schools that is attributable to T14 status. We find that T14 law schools confer no signaling effect on the Bar exam, which is graded blindly, but a substantial signaling effect on employment at “Big Law” firms with more than 250 attorneys, which pay some of the highest salaries in the law profession. The lowest-ranked T14 university increases the likelihood of Big Law employment by 30 percentage points (96%) more than the highest-ranked non-T14 university. This likely reflects asymmetric information in the labor market for lawyers, and thus graduating from a T14 law school serves as a signal of a lawyer’s ability.

Keywords: Human capital; Signaling; Law school; Returns to education; Asymmetric information; Value added; Regression discontinuity (search for similar items in EconPapers)
JEL-codes: I23 I26 J23 J24 J44 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1016/j.econedurev.2022.102282

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