Recent studies have found a large earnings premium to attending a more selective college, but the mechanisms underlying this premium have received little attention and remain unclear. In order to shed light on this question, I develop a multidimensional signaling model relying on college grades and selectivity that rationalizes students' choices…

Merit pay for professors to encourage better teaching, research and service is controversial. Its effectiveness can be examined empirically. In this study, the existence of a merit plan and ACT scores of incoming freshmen were strongly associated with measurable research outcomes. Additional study is needed to test the association with the other…