Signaling or better human capital: Evidence from Colombia

Abstract

Abstract We use data from the admissions process from a highly selective private university in Colombia to analyze the impact of prestigious university attendance on the education trajectory and labor market outcomes of individuals. The university´s selection process allows the use of a regression discontinuity design. We estimate both intent-to-treatment (offer admissions) and treatment-on-the-treated (enrollment) effects. The results show positive effects of offering admission to the prestigious university on the probability of enrollment, 13.8 percentage point (pp), 1.3 pp increase in academic credits a student need to repeat, and increment in 7 pp in probability of graduation. Despite no significant effects on the standardized university exit exam, we found positive effects on the probability of employment and earnings, 7.4 and 4.6 pp respectively. These results suggest that prestigious universities are more effective source of signaling in the labor market, but they are not more effective than other universities in developing human capital.