Prestige Matters: Wage Premium and Value Addition in Elite Colleges

This paper provides evidence that graduates of elite public institutions in India have an earnings advantage in the labor market even though attending these colleges has no discernible effect on academic outcomes. Admission to the elite public colleges is based on the scores obtained in the Senior Secondary School Examinations. I exploit this feature in a regression discontinuity design. Using administrative data on admission and college test scores and an in-depth survey, I find that the salaries of elite public college graduates are higher at the admission cutoff although the exit test scores are no different.