The Long-Run Efficiency Consequence of Unfair School Matching: Evidence from China College Student Survey

Abstract

In this paper, we address empirically the issue how unfair match between colleges and students would affect the long-run efficiency of the college admission system, measured by total wage level among college graduates. Using data from China College Student Survey, we find that unfair match tends to increase the total wage offer. The implication is that student ability and school quality are substitutes rather than complements, at least among unfairly matched students. We also find evidence that unfair match leads to higher total human capital investment on English skill, leadership, and double major, but not on high GPA. We interpret this finding as unfair match, by increasing the ability inequality within a college, encourages diversified human capital investment instead of monotonic competition, which indicates possible channels of efficiency improvement.