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The Returns to College Major Choice: Average and Distributional Effects, Career Trajectories, and Earnings Variability

Rodney Andrews¹; Scott Imberman²; Michael F. Lovenheim³; Kevin Stange⁴

¹ The University of Texas at Dallas and NBER · ² Michigan State University and NBER [email protected] · ³ Cornell University, NBER, and Hoover Institution [email protected] · ⁴ The University of Michigan and NBER [email protected]

A growing literature examining labor market returns to college major is motivated by large returns to skill. Prior research focuses on mean effects rather than earnings growth and variability. Using administrative data from Texas, we find that mean differences mask important features of the returns to college majors. First, earnings growth varies across fields. Second, there is considerable effect heterogeneity across workers. Third, major choice affects earnings variability within workers over time. We use our results to simulate a lifecyle utility model and compare mid-career utility and mean earnings returns across fields while highlighting the important role of risk preferences.

DOI

10.1162/rest_a_01503

Pages

1-45

Language

en

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