Degree classification and recent graduates’ ability: Is there any signalling effect?

Research across several countries has shown that degree classification (i.e. the final grade awarded to students successfully completing university) is an important determinant of graduates’ first destination outcome. Graduates leaving university with higher degree classifications have better employment opportunities and a higher likelihood of continuing education relative to those with lower degree classifications. This article investigates whether one of the reasons for this result is that employers and higher education institutions use degree classification as a signalling device for the ability that recent graduates may possess. Given the large number of applicants and the amount of time and resources typically required to assess their skills, employers and higher education institutions may decide to rely on this measure when forming beliefs about recent graduates’ abilities. Using data on two cohorts of recent graduates from a UK university, results suggest that an Upper Second degree classification may have a signalling role.