Higher education non-completion, employers, and labor market integration: Experimental evidence

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 = 1382 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. © 2022

Keywords

Author Keywords

signaling Germany Factorial survey experiment Returns to education College dropout Credentialism Employer behavior Incomplete degree

Index Keywords

human Humans educational status academic success Personnel selection occupation personnel management Occupations

Author Affiliations

Freie Universität Berlin, Berlin, Berlin, Germany

Ludwig-Maximilians-Universität München, Munich, Bayern, Germany

Funding & Acknowledgements

Bundesministerium für Bildung und Forschung, BMBF

Grant: 01PX16012

Funding text 1: This work was supported by the German Federal Ministry of Education and Research (grant number 01PX16012 to M.N.). We thank Rainer Watermann and Peter Steiner for supporting us during the design of the study. We are grateful for valuable comments from Daniel Klein, Walter Müller, the editor and reviewers of SSR. Parts of this article were presented at the ECSR Conference in Lausanne, and meetings at the WZB and the DZHW. We thank all participants for their helpful feedback.; Funding text 2: This work was supported by the German Federal Ministry of Education and Research (grant number 01PX16012 to M.N.). We thank Rainer Watermann and Peter Steiner for supporting us during the design of the study. We are grateful for valuable comments from Daniel Klein, Walter Müller, the editor and reviewers of SSR. Parts of this article were presented at the ECSR Conference in Lausanne, and meetings at the WZB and the DZHW. We thank all participants for their helpful feedback.

Bundesministerium für Bildung und Forschung, BMBF

Funding text 1: This work was supported by the German Federal Ministry of Education and Research (grant number 01PX16012 to M.N.). We thank Rainer Watermann and Peter Steiner for supporting us during the design of the study. We are grateful for valuable comments from Daniel Klein, Walter Müller, the editor and reviewers of SSR. Parts of this article were presented at the ECSR Conference in Lausanne, and meetings at the WZB and the DZHW. We thank all participants for their helpful feedback.; Funding text 2: This work was supported by the German Federal Ministry of Education and Research (grant number 01PX16012 to M.N.). We thank Rainer Watermann and Peter Steiner for supporting us during the design of the study. We are grateful for valuable comments from Daniel Klein, Walter Müller, the editor and reviewers of SSR. Parts of this article were presented at the ECSR Conference in Lausanne, and meetings at the WZB and the DZHW. We thank all participants for their helpful feedback.

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Higher education non-completion, employers, and labor market integration: Experimental evidence

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