Fraternities and Labor Market Outcomes

Abstract

We model how student choices to rush a fraternity, and fraternity admission choices, interact with signals firms receive about student productivities to determine labor-market outcomes. The fraternity and students value wages and fraternity socializing values. We provide sufficient conditions under which, in equilibrium, most members have intermediate abilities: weak students apply, but are rejected unless they have high socializing values, while most able students do not apply to avoid taint from association with weaker members. We show this equilibrium reconciles the ability distribution of fraternity members at the University of Illinois, and estimate the fraternity's welfare impact on different students.

Keywords: self-selection, screening, fraternities, statistical discrimination

JEL Classification: J31, D82, H4