IDEAS home Printed from https://ideas.repec.org/a/eee/labeco/v28y2014icp14-23.html
   My bibliography  Save this article

The lifetime earnings premia of different majors: Correcting for selection based on cognitive, noncognitive, and unobserved factors

Author

Listed:
  • Webber, Douglas A.

Abstract

This paper constructs a simulation approach to estimate the lifetime returns to various college majors. I use data from the 1979 cohort of the National Longitudinal Survey of Youth and American Community Survey to estimate the parameters which form the backbone of the simulation. I address selection into both higher education and specific major categories using measures of cognitive and noncognitive ability. Additionally, I present the lifetime premia under various assumptions regarding the magnitude of unobservable sorting.

Suggested Citation

  • Webber, Douglas A., 2014. "The lifetime earnings premia of different majors: Correcting for selection based on cognitive, noncognitive, and unobserved factors," Labour Economics, Elsevier, vol. 28(C), pages 14-23.
    • Handle: RePEc:eee:labeco:v:28:y:2014:i:c:p:14-23
    DOI: 10.1016/j.labeco.2014.03.009
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0927537114000281
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.labeco.2014.03.009?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    2. Arcidiacono, Peter & Hotz, V. Joseph & Kang, Songman, 2012. "Modeling college major choices using elicited measures of expectations and counterfactuals," Journal of Econometrics, Elsevier, vol. 166(1), pages 3-16.
    3. Groves, Melissa Osborne, 2005. "How important is your personality? Labor market returns to personality for women in the US and UK," Journal of Economic Psychology, Elsevier, vol. 26(6), pages 827-841, December.
    4. James J. Heckman & Jora Stixrud & Sergio Urzua, 2006. "The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior," Journal of Labor Economics, University of Chicago Press, vol. 24(3), pages 411-482, July.
    5. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
    6. Murnane, Richard J. & Willett, John B. & Braatz, M. Jay & Duhaldeborde, Yves, 2001. "Do different dimensions of male high school students' skills predict labor market success a decade later? Evidence from the NLSY," Economics of Education Review, Elsevier, vol. 20(4), pages 311-320, August.
    7. Joseph G. Altonji & Erica Blom & Costas Meghir, 2012. "Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 185-223, July.
    8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    9. Hamermesh, Daniel S. & Donald, Stephen G., 2008. "The effect of college curriculum on earnings: An affinity identifier for non-ignorable non-response bias," Journal of Econometrics, Elsevier, vol. 144(2), pages 479-491, June.
    10. Ronald G. Ehrenberg, 2012. "American Higher Education in Transition," Journal of Economic Perspectives, American Economic Association, vol. 26(1), pages 193-216, Winter.
    11. Deborah A. Cobb‐Clark & Stefanie Schurer, 2013. "Two Economists' Musings on the Stability of Locus of Control," Economic Journal, Royal Economic Society, vol. 0, pages 358-400, August.
    12. Mark C. Berger, 1988. "Predicted Future Earnings and Choice of College Major," ILR Review, Cornell University, ILR School, vol. 41(3), pages 418-429, April.
    13. Averett, Susan L. & Burton, Mark L., 1996. "College attendance and the college wage premium: Differences by gender," Economics of Education Review, Elsevier, vol. 15(1), pages 37-49, February.
    14. Montmarquette, Claude & Cannings, Kathy & Mahseredjian, Sophie, 2002. "How do young people choose college majors?," Economics of Education Review, Elsevier, vol. 21(6), pages 543-556, December.
    15. Walker, Ian & Zhu, Yu, 2011. "Differences by degree: Evidence of the net financial rates of return to undergraduate study for England and Wales," Economics of Education Review, Elsevier, vol. 30(6), pages 1177-1186.
    16. A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
    17. Christopher R. Taber, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(3), pages 665-691.
    18. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
    19. Robst, John, 2007. "Education and job match: The relatedness of college major and work," Economics of Education Review, Elsevier, vol. 26(4), pages 397-407, August.
    20. Dominic J. Brewer & Eric R. Eide & Ronald G. Ehrenberg, 1999. "Does It Pay to Attend an Elite Private College? Cross-Cohort Evidence on the Effects of College Type on Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 104-123.
    21. Eide, Eric & Waehrer, Geetha, 1998. "The Role of the Option Value of College Attendance in College Major Choice," Economics of Education Review, Elsevier, vol. 17(1), pages 73-82, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Webber, Douglas A., 2016. "Are college costs worth it? How ability, major, and debt affect the returns to schooling," Economics of Education Review, Elsevier, vol. 53(C), pages 296-310.
    2. Webber, Douglas A., 2015. "Are College Costs Worth It? How Individual Ability, Major Choice, and Debt Affect Optimal Schooling Decisions," IZA Discussion Papers 8767, Institute of Labor Economics (IZA).
    3. Joseph G. Altonji & Peter Arcidiacono & Arnaud Maurel, 2015. "The Analysis of Field Choice in College and Graduate School: Determinants and Wage Effects," NBER Working Papers 21655, National Bureau of Economic Research, Inc.
    4. Douglas Webber, 2014. "Is the return to education the same for everybody?," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-92, October.
    5. Arpita Patnaik & Matthew J. Wiswall & Basit Zafar, 2020. "College Majors," NBER Working Papers 27645, National Bureau of Economic Research, Inc.
    6. Hilmer, Michael J. & Hilmer, Christiana E., 2012. "On the relationship between student tastes and motivations, higher education decisions, and annual earnings," Economics of Education Review, Elsevier, vol. 31(1), pages 66-75.
    7. Fricke, Hans & Grogger, Jeffrey & Steinmayr, Andreas, 2015. "Does Exposure to Economics Bring New Majors to the Field? Evidence from a Natural Experiment," IZA Discussion Papers 9003, Institute of Labor Economics (IZA).
    8. Di Paolo, Antonio & Tansel, Aysit, 2017. "Analyzing Wage Differentials by Fields of Study: Evidence from Turkey," GLO Discussion Paper Series 91, Global Labor Organization (GLO).
    9. Alaitz Artabe & Javier Gardeazabal, 2017. "Degree choice evidence from stated preferences," Empirical Economics, Springer, vol. 52(4), pages 1205-1234, June.
    10. Fricke, Hans & Grogger, Jeffrey & Steinmayr, Andreas, 2018. "Exposure to academic fields and college major choice," Economics of Education Review, Elsevier, vol. 64(C), pages 199-213.
    11. Katja Görlitz & Barbara S. Grave, 2012. "Wage Differentials by Field of Study – The Case of German University Graduates," Ruhr Economic Papers 0316, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    12. repec:zbw:rwirep:0316 is not listed on IDEAS
    13. Khan, Bilal Muhammad, 2019. "Education Occupation Mismatch in Developing countries," MPRA Paper 92324, University Library of Munich, Germany.
    14. Light, Audrey & Schreiner, Sydney, 2019. "College major, college coursework, and post-college wages," Economics of Education Review, Elsevier, vol. 73(C).
    15. Ralph Stinebrickner & Todd R. Stinebrickner, 2014. "A Major in Science? Initial Beliefs and Final Outcomes for College Major and Dropout," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(1), pages 426-472.
    16. Xia, Xiaoyu, 2016. "Forming wage expectations through learning: Evidence from college major choices," Journal of Economic Behavior & Organization, Elsevier, vol. 132(PA), pages 176-196.
    17. Thomas Lemieux, 2014. "Occupations, fields of study and returns to education," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1047-1077, November.
    18. Tarun Jain & Abhiroop Mukhopadhyay & Nishith Prakash & Raghav Rakesh, 2022. "Science education and labor market outcomes in a developing economy," Economic Inquiry, Western Economic Association International, vol. 60(2), pages 741-763, April.
    19. de Araujo, Pedro & Lagos, Stephen, 2013. "Self-esteem, education, and wages revisited," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 120-132.
    20. Bradley, Elizabeth S., 2012. "The Effect of the Business Cycle on Freshman Major Choice," MPRA Paper 42412, University Library of Munich, Germany.
    21. Erica Blom & Brian C. Cadena & Benjamin J. Keys, 2021. "Investment over the Business Cycle: Insights from College Major Choice," Journal of Labor Economics, University of Chicago Press, vol. 39(4), pages 1043-1082.

    More about this item

    Keywords

    Return to education; Major choice;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:labeco:v:28:y:2014:i:c:p:14-23. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/labeco .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.