The Big Sort: College Reputation and Labor Market Outcomes

W. Bentley MacLeod, Evan Riehl, Juan E. Saavedra, Miguel Urquiola
2017 American Economic Journal: Applied Economics  
This appendix presents a complete version of the theory in Section I, which incorporates college reputation into the literature on information and wage formation (Jovanovic, 1979; Farber and Gibbons, 1996; Altonji and Pierret, 2001). We define a measure of reputation, specify a model of wage setting, and conclude with derivations of propositions that are the basis for our empirical analyses in Sections II and III. A. Ability, admission scores, and college reputation We let ↵ i denote the log
more » ... lity of student i, where we use the term ability to represent the type of aptitude measured by pre-college admission tests. We suppose ↵ i ⇠ N (0, 1 ⇢ ↵ ), where ⇢ ↵ = 1 2 ↵
doi:10.1257/app.20160126 fatcat:cj6zaryttbh33a6yys6iebq6si