Popov, Sergey V. and Bernhardt, Dan (2010): University Competition, Grading Standards and Grade Inflation.
Download (259kB) | Preview
We develop a model of strategic grade determination by universities distinguished by their distributions of student academic abilities. Universities choose grading standards to maximize total wages of graduates. Job placement and wages hinge on a ﬁrm’s productivity assessment given a student’s university, grade and productivity signal. We identify conditions under which better universities set lower grading standards, exploiting the fact that ﬁrms cannot distinguish between “good” and “bad” “A”s. In contrast, a social planner sets stricter standards at better universities. We show how increases in skilled jobs drive grade inﬂation, and determine when grading standards fall faster at better schools.
|Item Type:||MPRA Paper|
|Original Title:||University Competition, Grading Standards and Grade Inflation|
|Keywords:||grading standards; grading inﬂation; information|
|Subjects:||I - Health, Education, and Welfare > I2 - Education and Research Institutions > I21 - Analysis of Education|
|Depositing User:||Sergey Popov|
|Date Deposited:||05. Nov 2010 21:11|
|Last Modified:||09. Mar 2015 05:16|
Bagnoli, M. and T. Bergstrom (2005): “Log-concave probability and its applications,” Economic Theory, 26, 445–469.
Bagues, M., M. S. Labini, and N. Zinovyeva (2008): “Diﬀerential Grading Standards and University Funding: Evidence from Italy,” CESifo Economic Studies, 54, 149–176.
Bar, T. and A. Zussman (2010): “Partisan grading,” Working paper.
Betts, J. R. (1998): “The Impact of Educational Standards on the Level and Distribution of Earnings,” The American Economic Review, 88, 266–275.
Chen, W., L. Hao, and W. Suen (2007): “A Signaling Theory of Grade Inﬂation,” International Economic Review, 48, 1065–1090.
Coate, S. and G. C. Loury (1993): “Will Aﬃrmative-Action Policies Eliminate Negative Stereotypes?” American Economic Review, 83, 1220–1240.
Costrell, R. (1994): “A Simple Model of Educational Standards,” American Economic Review, 84, 956–971.
Dubey, P. and J. Geanakoplos (2009): “Grading Exams: 100, 99, ..., 1 Or A, B, C? Incentives In Games Of Status,” Yale University.
Lizzeri, A. (1999): “Information Revelation and Certiﬁcation Intermediaries,” The RAND Journal of Economics, 30, 214–231.
MacLeod, W. B. and M. Urquiola (2009): “Anti-Lemons: School Reputation and Educational Quality,” Working Paper 15112, National Bureau of Economic Research.
Rojstaczer, S. (2003): “Where All Grades Are Above Average,” Washington Post.
Rose, H. and J. R. Betts (2004): “The Eﬀect of High School Courses on Earnings,” Review of Economics and Statistics, 86, 497–513.
Yang, H. and C. S. Yip (2003): “An Economic Theory Of Grade Inﬂation,” University of Pennsylvania.