Grade Inflation Reduces Long‑Run Outcomes

Passing‑grade inflation and mean‑level grade inflation have opposite effects: giving more students passing marks (raising the pass threshold) increases short‑term progression (fewer retentions, higher immediate enrollment) but can worsen downstream test scores and later earnings; widespread mean grade inflation reduces credentials' signaling value and harms long‑run outcomes. — If causal, the finding forces policymakers to treat grading standards as major levers for social mobility, admissions policy, and labor‑market signaling — not mere academic housekeeping.