Making Top Managers: The Role of Elite Universities and Elite Peers

This paper estimates the causal effect of elite college admission on students’ chances of reaching top management positions, and decomposes the total effect into a component attributable to ties formed between college peers and a component attributable to other institutional inputs. I construct a novel dataset linking archival records of applications to elite colleges in Chile to the census of corporate directors and executive managers at publicly traded Chilean firms. I combine these data with a regression discontinuity design to estimate the causal effect of admission on leadership outcomes. Overall, elite admission raises the number of leadership positions students hold by 50 percent, but gains are larger for students who attended elite private high schools and near zero for students who did not. Admitted students from elite high schools are much more likely to work in top management roles with other elite high school students from their college degree program and cohort, but are no more likely to work with elite high school students from the same degree program in other cohorts or other degree programs in the same cohort. I interpret this difference-in-differences analysis of co-management outcomes using a simple model of referral-based hiring. The model suggests that peer ties account for 80 to 100 percent of admissions gains for elite high school students. I thank Joseph Altonji, Eduardo Engel, Francisco Gallego, Martin Hackmann, Justine Hastings, Lisa Kahn, Adam Kapor, Amanda Kowalski, Fabian Lange, Costas Meghir, Christopher Neilson, Craig Palsson, Jamin Speer, Ebonya Washington, and seminar participants at the Yale Labor and Public Economics Workshop for their valuable suggestions. I thank DEMRE Directors Ivan Silva and Eduardo Rodriguez for access to college application data. I thank Pablo Maino, Valeria Maino, and Nadia Vazquez for assistance with archival research. I thank Anely Ramirez for her contributions to data collection and institutional research. I thank the Yale Program in Applied Economics and Policy and the Cowles Structural Microeconomics Program for financial support. All errors are my own.