Educational Credentials and Intra-Occupational Inequality: Evidence from Law Firm Dissolutions.

Abstract

This study examines how the matching of individuals and employers based on educational credentials contributes to intra-occupational inequality. Treating six U.S. law firm dissolutions as mobility quasi-experiments, I analyze 1,426 lawyers’ post-dissolution labor market outcomes and establish two key findings that reconcile technical-functional and sociocultural accounts of educational stratification. First, consistent with an ability-signaling mechanism, graduates of more prestigious law schools regained employment at more rewarding employers but this tendency weakened with one’s work experience. Second, consistent with a social network mechanism, lawyers were more likely to regain employment at an organization the more former law school classmates were employed by the organization. The results imply that the signal function of educational credentials influences the matching of inexperienced individuals to employers and that social networks reproduce the distribution by structuring opportunities to change employers.

Keywords: networks, attainment, law firms, careers, mobility

JEL Classification: J44, J63, L84, M51