Market signaling of educational background: evidence from a field experiment

LI Bin BAI Yan

【Abstract】Since 1999, the Chinese government has implemented a policy of large-scale expansion in the field of higher education. The number of undergraduate enrollments in China has increased from 653,100 per year in 1998 to 4,108,100 per year in 2017. Over the same period, the number of graduate students enrolled in China rose from 57,500 to 722,200. It usually takes two years to obtain a Master’s degree. However, in China, Master’s degree candidates usually find a job in the second year on campus. Since May 1998, the Chinese government has launched the 985 Project, the 211 Project, and other financial support projects to promote the development of world-leading universities. The 985 Project selected 39 universities and the 211 Project selected 112 universities (the 39 universities in the 985 Project were included in the 211 Project). These universities account for 1.3% and 3.8% of all Chinese universities (almost all of which are public universities), respectively. The 211 Project universities receive far more financial support from the government than other universities. This financial support has led to a rapid improvement in the average level of these universities and widened the gap between them and the other universities. Graduates of the 211 Project universities have special status, and they receive exceptional treatment. Because the college entrance examination is the most common way for Chinese people to advance professionally, this status may accompany them for life. Therefore, even if undergraduate graduates of non-211 Project universities are admitted to 211 Project universities to study for a Master’s degree, they may still be discriminated against by employers in job hunting after graduation. Empirical studies have provided little robust evidence of the existence of such first-degree (i.e. Bachelor’s degree) discrimination and have not begun to explore the reasons. Following the method used by Bertrand and Mullainathan (2004), we designed a field experiment for resume delivery. In the experiment, we sent a large number of resumes of Master’s graduates who graduated from the 211 Project universities to recruiters. By comparing the interview notices received by those with non-211 undergraduate degrees and those with 211 undergraduate degrees, we looked for evidence of first-degree discrimination. The results of the experiment showed that for initial employment, the response rate for CVs from graduates with first degrees from non-211 Project universities was 41% lower than that for graduates with first degrees from 211 Project universities. Better internship experiences, school performances, and qualification certificates increased response rate significantly and decreased first-degree discrimination. No significant first-degree discrimination was found in social recruitment. Therefore, there may be statistical discrimination based on the first degree in the hiring process. This paper has made two core contributions. First, it is the first paper to use field experiments to study first-degree discrimination. By controlling personal characteristics such as job applicants’ abilities, we obtained robust evidence of the existence of first-degree discrimination. Second, this paper found through field experiments that first-degree discrimination involves statistical discrimination motives, that is, the first degree is to a certain extent a quality signal under asymmetric information, which employers use in estimating the expected productivity levels of different job-hunting groups. This paper provides sufficient evidence to prove the existence of first-degree discrimination in campus recruitment. Based on this discovery, we believed that the government and the news media should no longer promote projects like the 211 Project, as they lead to identity discrimination in job markets and ultimately decrease the economic efficiency of labor markets.

【Keywords】 labor market; first-degree discrimination; statistical discrimination; field experiment;

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ISSN:0577-9154

CN:11-1081/F

Vol 55, No. 10, Pages 176-192

October 2020

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