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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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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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  1. Beffy, Magali & Fougère, Denis & Maurel, Arnaud, 2009. "Choosing the Field of Study in Post-Secondary Education: Do Expected Earnings Matter?," IZA Discussion Papers 4127, Institute for the Study of Labor (IZA).
  2. 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.
  3. Brian P. McCall, 1988. "Occupational Matching: A Test of Sorts," Working Papers 617, Princeton University, Department of Economics, Industrial Relations Section..
  4. Ronni Pavan, 2011. "Career Choice and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 29(3), pages 549 - 587.
  5. Shintaro Yamaguchi, 2011. "Tasks and Heterogeneous Human Capital," Department of Economics Working Papers 2011-06, McMaster University.
  6. Sullivan, Paul, 2006. "A Dynamic Analysis of Educational Attainment, Occupational Choices, and Job Search," MPRA Paper 861, University Library of Munich, Germany.
  7. Michael P. Keane & Kenneth I. Wolpin, 1995. "The career decisions of young men," Working Papers 559, Federal Reserve Bank of Minneapolis.
  8. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
  9. Kevin M. Murphy & Andrei Shleifer & Robert W. Vishny, 1990. "The Allocation of Talent: Implications for Growth," NBER Working Papers 3530, National Bureau of Economic Research, Inc.
  10. Walter Y. Oi, 1962. "Labor as a Quasi-Fixed Factor," Journal of Political Economy, University of Chicago Press, vol. 70, pages 538.
  11. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  12. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January.
  13. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 9.
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Cited by:
  1. Peter Arcidiacono & Esteban Aucejo & V. Joseph Hotz, 2013. "University Differences in the Graduation of Minorities in STEM Fields: Evidence from California," CEP Discussion Papers dp1223, Centre for Economic Performance, LSE.
  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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