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The Specificity of General Human Capital: Evidence from College Major Choice

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  • Ronni Pavan

    (University of Rochester)

  • Josh Kinsler

    (University of Rochester)

Abstract

In this paper we develop a model to estimate the return to college major and to understand why students appear to give up part of their earnings potential by selecting less profitable majors. Starting from the empirical evidence that individuals who work in a job related to their major field of study earn significantly higher wages than those working in jobs unrelated to their major, we build a model in which part of the human capital accumulated while in college is specific to their field of study. This specificity of human capital may introduce a sort of occupational risk if the potential human capital is not perfectly observed by the agent at the moment of major choice. After rejecting the hypothesis that agents have perfect knowledge over their potential future labor market abilities, we show that this type of occupational risk helps explain why relatively few students choose science related majors.

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File URL: http://www.economicdynamics.org/meetpapers/2012/paper_1036.pdf
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Bibliographic Info

Paper provided by Society for Economic Dynamics in its series 2012 Meeting Papers with number 1036.

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Date of creation: 2012
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Handle: RePEc:red:sed012:1036

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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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Web page: http://www.EconomicDynamics.org/society.htm
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References

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  1. Arcidiacono, Peter, 2002. "Ability Sorting and the Returns to College Major," Working Papers 02-26, Duke University, Department of Economics.
  2. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implicationsfor Growth," University of Chicago - George G. Stigler Center for Study of Economy and State 65, Chicago - Center for Study of Economy and State.
  3. Shintaro Yamaguchi, 2012. "Tasks and Heterogeneous Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 1 - 53.
  4. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  5. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
  6. McCall, Brian P, 1990. "Occupational Matching: A Test of Sorts," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 45-69, February.
  7. Magali Beffy & Denis Fougère & Arnaud Maurel, 2012. "Choosing the Field of Study in Postsecondary Education: Do Expected Earnings Matter?," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 334-347, February.
  8. Sullivan, Paul, 2006. "A Dynamic Analysis of Educational Attainment, Occupational Choices, and Job Search," MPRA Paper 861, University Library of Munich, Germany.
  9. Keane, Michael P & Wolpin, Kenneth I, 1997. "The Career Decisions of Young Men," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 473-522, June.
  10. Christina Gathmann & Uta Schönberg, 2010. "How General Is Human Capital? A Task-Based Approach," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 1-49, 01.
  11. Joseph G. Altonji, 1991. "The Demand for and Return to Education When Education Outcomes are Uncertain," NBER Working Papers 3714, National Bureau of Economic Research, Inc.
  12. Ronni Pavan, 2006. "Career Choice and Wage Growth," 2006 Meeting Papers 504, Society for Economic Dynamics.
  13. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538.
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Cited by:
  1. Peter Arcidiacono & Esteban M. Aucejo & V. Joseph Hotz, 2013. "University Differences in the Graduation of Minorities in STEM Fields: Evidence from California," NBER Working Papers 18799, National Bureau of Economic Research, Inc.
  2. Peter Arcidiacono & Esteban Aucejo & V. Joseph Hotz, 2013. "University differences in the graduation of minorities in STEM fields: evidence from California," LSE Research Online Documents on Economics 51564, London School of Economics and Political Science, LSE Library.

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