Job Market Signaling: Evidence from the German Excellence Initiative

Abstract

We study the wage effects of the German Excellence Initiative, a federal university funding and reputation program launched in 2006/07. Using graduate survey data for the 2001, 2005, and 2009 cohorts and a standard difference-in-differences design, we compare labor market entry wages of graduates from newly designated elite universities to those from other institutions. Preliminary results show large wage premia one year after graduation. Due to the unforeseen nature of the program, we find no evidence of affected graduation cohorts selecting into elite universities. This suggests that a considerable share of the wage premium may be explained by pure signaling effects.

Andreas Leibing

Postdoctoral Researcher

I’m an applied microeconomist with a particular interest in labor economics and the economics of education.