Graduates of Elite Universities Get Paid More. Do They Perform Better?

In a study of working recent college graduates, the authors found that recent grads from higher-ranked universities outperformed their peers from lower ranked universities to a limited degree. This research is useful for hiring managers who need to carefully consider the worth of the increase in performance for the firm. For some companies, the difference between a hypothetical graduate from an “average” vs. “top” university may be well worth the extra pay that these candidates typically receive. Yet, for others the added cost may not result in a positive return on investment and, thus, may not be justified. All in all, the authors find that hiring graduates from higher-ranked universities would lead to a nominal improvement in performance, but that employers can get a much better deal by hiring the “right” students from lower-ranked institutions, than “anyone” from better-ranked institutions.