How do you survive a recession? Attend an elite US college.
Who benefits from a recession? Russell Weinstein – an Assistant Professor in the University of Illinois at Urbana-Champaign’s Department of Economics – has an answer.
In a paper published this year, Weinstein argues that “the income gap between alumni of elite and less selective universities widened for cohorts graduating during the Great Recession.” In part, this is explained by “high-wage firms” concentrating their recruitment at top schools during periods of economic uncertainty. The other explanation is that students at top schools already exhibit traits that make them more resilient. Either way, it’s tough out there if your college’s bricks aren’t ivy clad.
Weinstein’s dataset comprises employer recruiting decisions for “65 prestigious finance, consulting, and fortune 250 companies.” Elite banks (Lazard, Rothschild, Jefferies) and consulting firms (Bain, McKinsey, Booz Allen Hamilton) are represented alongside a selection of non-elite, non-finance employers (Goodyear Tire & Rubber, Lowe’s). Weinstein’s research shows that all these firms recruited fewer candidates from lower-tier schools during and after the Great Recession for two main reasons: they were unwilling to pay the cost for the additional screening required at lower-tier universities and candidates at top-tier universities were more likely to accept job offers given the economic uncertainty, so fewer positions trickled down to less-prestigious schools.
If Weinstein's recession theory holds true, it’s likely that a similar recruitment and income gap emerged during the Covid-19 pandemic. Indeed, recent data compiled by Matt Ting at training company Peak Frameworks suggests the elite vs. non-elite school hiring dynamic still existed as recently as 2019. Ting’s chart below was constructed from trawling LinkedIn data to show which schools produced the most IBD analysts in a five year period from 2014. Target schools (highlighted in green) are recognisable ivy league and business school behemoths while semi-target schools (highlighted in blue) comprise a broader range of colleges. As Ting writes, the semi-targets are “not as traditionally prestigious from an overall school level (except Stanford and Brown), but have made a name for themselves by having strong finance programs.”
Source: Matt Ting, Peak Frameworks, LinkedIn
It’s too early to assess which university graduates have benefitted most from pandemic hiring patterns as penultimate-year students who completed internships in 2021 will not be starting full-time work until this fall. In the absence of hard data, though, we can look at anecdotal evidence. Who better than Litquidity – Instagram’s premier finance meme page – to clarify the target vs. non-target breakdown as it stood mid-2021. They even sell a sweater on their website which proudly advertises the wearer as “non-target”.
Litquidity’s Wall Street feeder pipeline below makes clear the Ivy Leagues still dominate the sought after upper-left quadrant of their chart. For those less familiar with the lingo of Instagram meme accounts, “Goober Nation” refers to the nerdiness of those colleges on the left side of the graph, “AF” is an expletive that rhymes with “as duck” and “Hella Cheek Clappin” is something you can google for yourself.
Source: Litquidity
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