Exit Exams as a Governance Instrument in the School System: The Importance of School-Leaving Grades for the Hiring Decisions of Firms

Tasks

The project: “Exit Exams as a Governance Instrument in the School System: The Importance of School-Leaving Grades for the Hiring Decisions of Firms” examines the importance of school-leaving grades compared to other skill signals on a resume for hiring decisions of firms in Germany. Using a controlled decision experiment and subsequent survey of human resource managers from a representative sample of firms from Germany, we aimed to answer for questions in particular: (1) What is the general impact of school-leaving grades on hiring decisions for firms? (2) What is the impact of school-leaving grades on hiring decisions for labour market entrants, who enter straight after school? (3) What is the impact of school-leaving grades on hiring decisions for labour market entrants who acquired a further productivity signal, such as a college degree? (4) How does the centrality of the examination system impact hiring decisions?

The results of the previous project "Central Exit Exams as a Governance Instrument in the School System: Labour-Market Effects, Transmission Channels and Effect Heterogeneity" reveal that central exit exams have long-term implications for an individual’s success on the labour market. However, the observed positive association between central exit exams and labour-market success, as well as the role played by school-leaving grades in hiring decisions in general, is not yet fully understood. The school grade point average for high school graduates who enter the labour market directly and apply for apprenticeship positions is a direct productivity signal to employers. College graduates on the other hand, have acquired a further productivity signal through their college degree. Using a randomised control trial with a subsequent survey among human resource managers in Germany, we analyse the relative influence of high school and college GPAs, as well as other possible productivity signals on a CV such as language, IT and social skills on employability.

Methods

Around 600 human resource managers taken from a representative sample of firms in Germany participated in our online decision experiment and survey. During the experiment the human resource managers were presented with two fictitious CVs, which included information on the candidates’ qualifications and GPA, experience through internships, as well as language, IT and social skills. The participants were asked which fictitious candidate they would rather invite to an interview in their company. All information on the CVs was randomized, which allows us to determine the causal effects of each CV element on employability using multivariate regression methods. Prior to the experiment, the human resource managers were divided into two groups depending on the average level of education of employees in the firm. One half of human resource managers was given CVs of candidates that were applying for apprentice positions, while the other half was given college graduates applying for a graduate position. The survey that followed the decision experiment inquired personal information about the human resource manager such as age, gender and level of education and further asked explicitly about the determinants of their employment decisions.

Results

Our results suggest that high school GPAs are important, when the candidate enters the labour market directly after school. The high school GPA of apprenticeship candidates has a statistically significant positive effect on the probability of being invited for an interview, while it is insignificant for college graduates, who have acquired a further productivity signal. The college GPA is the most important CV element for the latter, followed by the length of their labour market experience acquired through internships. We also find that school-leaving grades in the academic tracks high-school (Abitur) from German federal states with traditionally central school-leaving examinations, have a stronger signalling value, than from states without traditionally central school-leaving examinations. For apprenticeship applicants, IT as well as social skills shown through voluntary work also have large effects on the probability of being invited for an interview. The results from the survey further mirror the regression results from the experiment.

A minority of HR managers say they would prefer to employ a candidate from a state with a central exit exam system. However, a larger share of human resource managers from states with a longstanding central exit exam tradition say they would prefer a candidate from a central exit system than human resource managers from states without this tradition. This difference in preferences is larger in the sample with apprenticeship applicants than with college graduates.