School Effects on College Outcomes in the Absence of Standardized Tests: The Role of Reputation vs. Effectiveness

Without standardized tests, college admissions may reward high schools’ reputation over effectiveness—a phenomenon the authors study in Peru. The authors first estimate the impact of selective public exam schools on college outcomes by leveraging the admissions mechanism in a single- and multiple-offers RDD. Despite no conclusive evidence of learning gains, graduating from exam schools significantly improves college applications, admissions, and enrollment, particularly at top private universities. Exam school graduation signaling students’ abilities is an important mechanism explaining these effects. Evidence of marginally obtaining the International Baccalaureate Diploma reinforces this signaling mechanism. The authors then develop and validate causal value-added models to assess the impact of all secondary schools on college outcomes. In line with exam school effects, value-added in learning does not predict a school’s impact on college outcomes after controlling for average graduates’ characteristics. These findings highlight the critical role of information frictions in perpetuating inequality and the importance of allowing talented low-income students to signal their skills.