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Choosing the Field of Study in Post-Secondary Education : Do Expected Earnings Matter ?

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Author Info

  • Magali BEFFY

    (Crest)

  • Denis FOUGERE

    (Crest)

  • Arnaud MAUREL

    (Crest)

Abstract

This paper examines the determinants of the choice of the major when the length ofstudies is uncertain, by using a framework in which students entering post-secondary educationare assumed to anticipate their future earnings. For that purpose, we use Frenchdata coming from the 1992 and 1998 Génération surveys collected by the Centre d’Etudeset de Recherches sur l’Emploi et les Qualifications (CEREQ, Marseille). Our econometricapproach is based on a semi-structural three-equations model, which is identified thanksto some exclusion restrictions. We exploit in particular exogenous variations in the earningsreturns associated with the majors across the business cycle, in order to identify thecausal effect of expected earnings on the probability of choosing a given major. Relying ona three-component mixture distribution, we account for correlation between the unobservedindividual-specific terms affecting the preferences for the majors, the unobserved individualspecificfactors entering the equation determining the length of studies within each major,and that affecting the labor market earnings equation. Following Arcidiacono and Jones(2003), we use the EM algorithm with a sequential maximization step to produce consistentparameter estimates. Simulating for each given major a 10 percent increase in the expectedearnings suggests that expected earnings have a statistically significant but quantitativelysmall impact on the allocation of students across majors.

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Bibliographic Info

Paper provided by Centre de Recherche en Economie et Statistique in its series Working Papers with number 2009-14.

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Length: 38
Date of creation: 2009
Date of revision:
Handle: RePEc:crs:wpaper:2009-14

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Expected earnings do not matter for post-secondary studies
    by Economic Logician in Economic Logic on 2009-06-15 09:50:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Borghans, Lex & Golsteyn, Bart H.H. & Stenberg, Anders, 2013. "Does Expert Advice Improve Educational Choice?," IZA Discussion Papers 7649, Institute for the Study of Labor (IZA).
  2. Aitor Lacuesta & Sergio Puente & Ernesto Villanueva, 2011. "The schooling response to a sustained increase in low-skill wages: evidence from Spain 1989-2009," Banco de Espa�a Working Papers 1208, Banco de Espa�a.
  3. Alena Bicakova & Stepan Jurajda, 2014. "The Quiet Revolution and the Family: Gender Composition of Tertiary Education and Early Fertility Patterns," CERGE-EI Working Papers wp504, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  4. D’Haultfœuille, Xavier & Maurel, Arnaud, 2013. "Inference on an extended Roy model, with an application to schooling decisions in France," Journal of Econometrics, Elsevier, vol. 174(2), pages 95-106.
  5. Sjoquist, David L. & Winters, John V., 2013. "State Merit-Aid Programs and College Major: A Focus on STEM," IZA Discussion Papers 7381, Institute for the Study of Labor (IZA).
  6. Ronni Pavan & Josh Kinsler, 2012. "The Specificity of General Human Capital: Evidence from College Major Choice," 2012 Meeting Papers 1036, Society for Economic Dynamics.
  7. Liu, Kai & Salvanes, Kjell G. & Sørensen, Erik Ø., 2012. "Good Skills in Bad Times: Cyclical Skill Mismatch and the Long-Term Effects of Graduating in a Recession," IZA Discussion Papers 6820, Institute for the Study of Labor (IZA).
  8. Matthew Wiswall & Basit Zafar, 2011. "Determinants of college major choice: identification using an information experiment," Staff Reports 500, Federal Reserve Bank of New York.
  9. Stefanescu, Razvan & Dumitriu, Ramona & Nistor, Costel, 2011. "Motivations for the Bessarabian youth to study in Romanian universities," MPRA Paper 41621, University Library of Munich, Germany, revised 02 Oct 2011.
  10. Tacsir, Ezequiel, 2010. "Choosing a career in Science and Technology," MERIT Working Papers 014, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  11. Tuomo Suhonen, 2012. "The role of distances and parents’ educational background in university field of study choice," ERSA conference papers ersa12p751, European Regional Science Association.
  12. Matthew Wiswall & Basit Zafar, 2011. "Belief updating among college students: evidence from experimental variation in information," Staff Reports 516, Federal Reserve Bank of New York.
  13. Tacsir, Ezequiel, 2010. "Occupation Choice: Family, Social and Market Influences," MERIT Working Papers 013, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  14. Tacsir, Ezequiel, 2009. "Elección de ocupación: factores personales y aspectos sociales
    [Occupation Choice: Personal factors and Social Aspects]
    ," MPRA Paper 20432, University Library of Munich, Germany.
  15. Legge, Stefan & Schmid, Lukas, 2013. "Rankings, Random Successes, and Individual Performance," Economics Working Paper Series 1340, University of St. Gallen, School of Economics and Political Science.
  16. Bradley, Elizabeth S., 2012. "The Effect of the Business Cycle on Freshman Major Choice," MPRA Paper 42412, University Library of Munich, Germany.
  17. Peter Arcidiacono & Paul B. Ellickson, 2011. "Practical Methods for Estimation of Dynamic Discrete Choice Models," Annual Review of Economics, Annual Reviews, vol. 3(1), pages 363-394, 09.

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