Águeda Solis Alonso (University of Turin and Collegio Carlo Alberto)
Given the widespread use of educational credentials as proxies for ability, examining which agents might value and use this information, and how, is a question of significant policy relevance. This paper examines the causal impact of Latin honors (Cum Laude) on labor market outcomes for Masters graduates. Combining university records with a graduate survey and administrative employment spells data, I leverage the Cum Laude eligibility rules to implement a regression discontinuity analysis. The findings show that while the Cum Laude does not translate into a premium in terms of earnings or job search, it makes graduates more likely to hold an intellectual or scientific profession. The distinction causes graduates to sort out of highly-paid industries, like finance and insurance, and into sectors such as education and health assistance, for which entry is usually regulated by public examinations, wages are relatively lower, and employment more stable. Moreover, the Cum Laude makes males, but not females, more likely to work in research. Ultimately, these findings suggest that academic distinctions can act as signals of ability for the recipients and affect their aspirations and job search behavior, also shaping the choice of pursuing further education.