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The Impact of Higher Education on Employer Perceptions
Do employers seek to attract individuals with more education because it enhances human capital or because it signals higher levels of pre-existing traits? We experimentally vary master’s degree completion rates on applicant r sum s and examine how this influences candidates’ desirability and employer perceptions of their productive characteristics. Our findings show that while a completed master’s degree increases desirability, an incomplete master’s degree is perceived by human resource managers as less favourable than a bachelor’s degree. This suggests that employers prefer candidates with higher education mainly because they view the degree as a signal of pre-existing productive traits. Consistent with this, employers perceive both cognitive and non-cognitive traits as stronger in master graduates but non-cognitive traits as weaker in master dropouts compared to bachelor’s degree holders. Overall, perceived cognitive and non-cognitive traits play a larger role in determining a candidate’s attractiveness than expertise. This paper thus provides causal evidence on the origins of the education premium.
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