Making the One Percent: The Role of Elite Universities and Elite Peers

Seth D. Zimmerman

NBER Working Paper No. 22900
Issued in December 2016, Revised in July 2017
NBER Program(s):Economics of Education, Labor Studies

This paper asks whether elite universities help students from modest socioeconomic backgrounds reach top positions in the economy. I combine administrative data on income and leadership teams at publicly traded firms with a regression discontinuity design based on admissions rules at elite business-focused degree programs in Chile. The 1.8% of college students admitted to these programs account for 41% of leadership positions and 38% of top 0.1% incomes. Admission raises the number of leadership positions students hold by 54% and their probability of attaining a top 0.1% income by 45%. However, these gains accrue only to applicants from high-tuition private high schools, not to students from other school types with similar admissions test scores. Admissions effects are equal to roughly half of the gap in rates of top attainment by high school background. A difference-in-differences analysis of the rates at which pairs of students lead the same firms indicates that peer ties formed between college classmates from similar backgrounds play an important role in driving the observed effects.

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Document Object Identifier (DOI): 10.3386/w22900

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