The quality of college education is hard for students and employers to observe. Knowing this, in the last 40 years over 1,000 colleges in the US and China alone have changed their names to signal higher quality. We study how these changes affect college choice and labor market performance of college graduates. Using administrative data, we show that colleges which change their names enroll higher-aptitude students and the effects persist over time. These effects are larger for attractive but misleading name changes, and larger among students with less information about the college. In a large resume audit study of the labor market for recent graduates, we find a small, insignificant premium for applicants listing new college names in most jobs, but a penalty in low-pay, low-status jobs. To better understand these results, we analyze scraped online text data, survey data, and other administrative data. These show that while many college applicants lack important information about college quality, employers can see that college name changes lead to an increase in graduate aptitude. Our study demonstrates that signals designed to change perception can have real, lasting impacts on market outcomes.
Education; information; college choice; labor market returns; behavioral economics
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