Grades and Employer Learning

Anne Toft Hansen (), Ulrik Hvidman () and Hans Sievertsen
Additional contact information
Anne Toft Hansen: VIVE - The Danish Centre for Applied Social Science
Ulrik Hvidman: Aarhus University

No 14200, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This study examines the labor-market returns of skill signals. We identify the labor-market effect of grade point averages (GPA) by leveraging a nationwide change in the scaling of grades in Danish universities. Results show that a reform-induced increase in GPA that is unrelated to ability causes higher earnings immediately after graduation, but the effect fades in subsequent years. The effect at labor-market entry is largest for individuals with fewer alternative signals and the earnings adjustment occurs both within and across firms. Although employers initially screen candidates based on skill signals, our findings suggest that they rapidly learn about worker productivity.

Keywords: higher education; job-market signaling; employer learning (search for similar items in EconPapers)
JEL-codes: I20 I26 J20 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2021-03
New Economics Papers: this item is included in nep-edu, nep-eur and nep-lma
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Published - published in: Journal of Labor Economics, 2024, 42 (3), 659–682

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Working Paper: Grades and Employer Learning (2021)
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