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

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  • 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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    Citations

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    Cited by:

    1. Britton, Jack & van der Erve, Laura & Belfield, Chris & Vignoles, Anna & Dickson, Matt & Zhu, Yu & Walker, Ian & Dearden, Lorraine & Sibieta, Luke & Buscha, Franz, 2022. "How much does degree choice matter?," Labour Economics, Elsevier, vol. 79(C).
    2. Bleemer, Zachary, 2023. "Affirmative action and its race-neutral alternatives," Journal of Public Economics, Elsevier, vol. 220(C).
    3. Fanny Landaud & Éric Maurin & Barton Willage & Alexander L.P. Willén, 2022. "Getting Lucky: The Long-Term Consequences of Exam Luck," CESifo Working Paper Series 9570, CESifo.
    4. Kevin J. Mumford & Richard W. Patterson & Anthony Yim, 2024. "College Course Shutouts," CESifo Working Paper Series 11005, CESifo.
    5. Stenberg, Anders & Tudor, Simona, 2024. "Field of Study and Mental Health in Adulthood," Working Paper Series 1/2024, Stockholm University, Swedish Institute for Social Research.
    6. Novik, Vitaliy, 2022. "The role of learning in returns to college major: evidence from 2.8 million reviews of 150,000 professors," MPRA Paper 115431, University Library of Munich, Germany.
    7. Avdeev, Stanislav & Ketel, Nadine & Oosterbeek, Hessel & van der Klaauw, Bas, 2023. "Spillovers in Fields of Study: Siblings, Cousins, and Neighbors," IZA Discussion Papers 16453, Institute of Labor Economics (IZA).
    8. Anthony LokTing Yim, 2023. "How Early Morning Classes Change Academic Trajectories: Evidence from a Natural Experiment," Purdue University Economics Working Papers 1334, Purdue University, Department of Economics.
    9. Phillip B. Levine & Dubravka Ritter, 2022. "The Racial Wealth Gap, Financial Aid, and College Access," Working Papers 22-32, Federal Reserve Bank of Philadelphia.
    10. Todd Pugatch & Elizabeth Schroeder, 2024. "A simple nudge increases socioeconomic diversity in undergraduate Economics," Economic Inquiry, Western Economic Association International, vol. 62(1), pages 287-307, January.
    11. Arpita Patnaik & Matthew J. Wiswall & Basit Zafar, 2020. "College Majors," NBER Working Papers 27645, National Bureau of Economic Research, Inc.
    12. Stenberg, Anders & Tudor, Simona, 2023. "Field of Study and Mental Health in Adulthood," IZA Discussion Papers 16701, Institute of Labor Economics (IZA).
    13. Atay, Salim & Asik, Gunes A. & Tumen, Semih, 2023. "Impact of Graduating with Honors on Entry Wages of Economics Majors," IZA Discussion Papers 16080, Institute of Labor Economics (IZA).

    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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