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Abstract
  • Signaling theory has shaped our understanding of how high-ability individuals try to distinguish themselves in the labor market: High-ability individuals benefit from a relative cost advantage compared to low-ability individuals when producing a credible signal of superior ability. When this cost advantage decreases, the signal’s value also decreases. We analyze how the signal ‘international qualification’ has changed due to increasing overall student mobility, driven by the effect of a massive change in the institutional framework, namely the implementation of the Bologna-reforms. Using a large and hitherto not accessible dataset with detailed information on 9,096 German high-ability students, we find that following the Bologna-reforms, high-ability students extended their stays and completed degrees abroad (instead of doing exchange semesters). No such changes in behavior are to be observed in the overall student population. We conclude that completing a degree abroad is the new labor market signal for ‘international qualification’ of high-ability students.
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