Abstract

I study the efficacy of test-based meritocracy in college admissions by evaluating the impact of a grade-based ‘top percent’ policy implemented by the University of California. Eligibility in the Local Context (ELC) provided large admission advantages to the top four percent of 2001-2011 graduates from each California high school. I construct a novel longitudinal dataset linking the ELC era’s 1.8 million UC applicants to educational and labor market outcomes. I first employ a regression discontinuity design to show that ELC led over 10 percent of barely-eligible applicants from low-opportunity high schools to enroll at selective UC campuses instead of less-selective public colleges and universities. Half of those participants were from underrepresented minority groups, and their average SAT scores were at the 12th percentile of their UC peers. Instrumental variable estimates show that ELC participants’ more-selective university enrollment caused increases in five-year degree attainment by 30 percentage points and annual early-career wages by up to $25,000. I then analyze ELC’s general equilibrium effects by estimating a structural model of university application, admission, and enrollment with an embedded top percent policy. I find that ELC and counterfactual expansions of ELC substantively increased disadvantaged students’ net enrollment at selective public universities. Reduced-form and structural estimates show that ELC participants derived similar or greater value from more-selective university enrollment than their higher-testing peers. These findings suggest that access-oriented admission policies at selective universities can promote economic mobility without efficiency losses.