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Will Studying Economics Make You Rich? A Regression Discontinuity Analysis of the Returns to College Major

Author

Listed:
  • Zachary Bleemer
  • Aashish Mehta

Abstract

We investigate the wage return to studying economics by leveraging a policy that prevented students with low introductory grades from declaring a major. Students who barely met the grade point average threshold to major in economics earned $22,000 (46 percent) higher annual early-career wages than they would have with their second-choice majors. Access to the economics major shifts students' preferences toward business/finance careers, and about half of the wage return is explained by economics majors working in higher-paying industries. The causal return to majoring in economics is very similar to observational earnings differences in nationally representative data.

Suggested Citation

  • Zachary Bleemer & Aashish Mehta, 2022. "Will Studying Economics Make You Rich? A Regression Discontinuity Analysis of the Returns to College Major," American Economic Journal: Applied Economics, American Economic Association, vol. 14(2), pages 1-22, April.
    • Handle: RePEc:aea:aejapp:v:14:y:2022:i:2:p:1-22
    DOI: 10.1257/app.20200447
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    More about this item

    JEL classification:

    • A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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