StudentsSocial Origins and Targeted Grade

Grade ination or soft grading is a common feature of the educational systems of many countries. In this paper I analyse grade ination in a setting in which students di¤er in social background, and the grading policy can be targeted according to student type. I consider a signalling game where rms decide whether to hire students and their salary after observing their grades and social background, a university can inate grades, when students decide whether to attend university. A targeted grade ination may have redistributive e¤ects by raising the salary of students with disadvantaged social background, if their grades are less inated than other students