The Impact of University Prestige in the Employment Process

Abstract

Do employers prioritize the signal associated with the name of the university someone graduated from above an applicant’s skills in the employment process? Using a field experiment of the labor market, 2,400 fictitious applications were submitted to job openings in three countries: United States, United Kingdom, and Australia. The resumes belonged to fictitious citizens with full working rights, both female and male, that have attended universities of varying prestige in the United States, United Kingdom, and Australia respectively. Two skill-intensive sectors of the labor market were chosen: information and communication technology and accounting.  For each sector of the labor market, two resumes were designed. One resume had a high skills match with the generic requirements of entry level jobs in each sector. A second resume had a low skills match with the same requirements. For each country, one high-ranked university and one non-high-ranked university were selected to signal prestige. The name of the university the applicant graduated from and the sex of the applicant were randomly assigned on otherwise identical resumes. This study distinguished between the effects of human capital (Becker, 1975; Mincer, 1974; Schultz, 1959; 1961) and the signaling effect of university prestige in the labor market (Spence, 1973), while controlling for networking effects (Bayer, Ross, & Topa, 2005; Petersen, Saporta, & Seidel, 2000). The results suggest that human capital—as measured through the high and low skills match resumes—was statistically significant in predicting callbacks. Applications in the high skills match condition were 79% more likely to receive a callback than applications in the low skills match condition. The prestige condition and the interaction between university prestige and match were not statistically significant. This experiment detected no statistically significant differences in callback rates based on the sex of the applicant. These findings suggest that human capital, and not university prestige, predicts recruitment outcomes for applicants with a bachelor’s degree only. These results support a call for skill building and human capital consolidation at higher education institutions.