IDEAS home Printed from https://ideas.repec.org/a/oup/qjecon/v131y2016i3p1057-1111..html
   My bibliography  Save this article

Editor's Choice Field of Study, Earnings, and Self-Selection

Author

Listed:
  • Lars J. Kirkeboen
  • Edwin Leuven
  • Magne Mogstad

Abstract

This article examines the labor market payoffs to different types of postsecondary education, including field and institution of study. Instrumental variables (IV) estimation of the payoff to choosing one type of education compared to another is made particularly challenging by individuals choosing between several types of education. Not only does identification require one instrument per alternative, but it is also necessary to deal with the issue that individuals who choose the same education may have different next-best alternatives. We address these difficulties using rich administrative data for Norway’s postsecondary education system. A centralized admission process creates credible instruments from discontinuities that effectively randomize applicants near unpredictable admission cutoffs into different institutions and fields of study. The admission process also provides information on preferred and next-best alternatives from strategy-proof measures of individuals’ ranking of institutions and fields. The results from our IV approach may be summarized with three broad conclusions. First, different fields of study have substantially different labor market payoffs, even after accounting for institution and peer quality. Second, the effect on earnings from attending a more selective institution tends to be relatively small compared to payoffs to field of study. Third, the estimated payoffs to field of study are consistent with individuals choosing fields in which they have a comparative advantage. Comparing our estimates to those obtained from other approaches highlights the importance of using instruments to correct for selection bias and information on individuals’ ranking of institutions and fields to measure their preferred and next-best alternatives. JEL Codes: C31, J24, J31.

Suggested Citation

  • Lars J. Kirkeboen & Edwin Leuven & Magne Mogstad, 2016. "Editor's Choice Field of Study, Earnings, and Self-Selection," The Quarterly Journal of Economics, Oxford University Press, vol. 131(3), pages 1057-1111.
  • Handle: RePEc:oup:qjecon:v:131:y:2016:i:3:p:1057-1111.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/qje/qjw019
    Download Restriction: Access to full text is restricted to subscribers.

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

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Walker, Ian & Zhu, Yu, 2018. "University selectivity and the relative returns to higher education: Evidence from the UK," Labour Economics, Elsevier, vol. 53(C), pages 230-249.
    2. Joanne Lindley & Stephen Machin, 2016. "The Rising Postgraduate Wage Premium," Economica, London School of Economics and Political Science, vol. 83(330), pages 281-306, April.
    3. repec:eee:ecoedu:v:64:y:2018:i:c:p:199-213 is not listed on IDEAS
    4. Simon Søbstad Bensnes, 2016. "Preparation time, exam scores, and tertiary education," Working Paper Series 17216, Department of Economics, Norwegian University of Science and Technology.
    5. Thomas (T.) Buser & Noemi Peter & Stefan Wolter, 2017. "Gender, Willingness to Compete and Career Choices Along the Whole Ability Distribution," Tinbergen Institute Discussion Papers 17-081/I, Tinbergen Institute.
    6. repec:eee:labeco:v:48:y:2017:i:c:p:215-230 is not listed on IDEAS
    7. Liu, Shimeng & Sun, Weizeng & Winters, John V., 2017. "Up in STEM, Down in Business: Changing College Major Decisions with the Great Recession," IZA Discussion Papers 10996, Institute for the Study of Labor (IZA).
    8. John Eric Humphries & Juanna Joensen & Gregory Veramendi, 2017. "College Major Choice: Sorting and Differential Returns to Skills," 2017 Meeting Papers 1623, Society for Economic Dynamics.
    9. repec:eee:labeco:v:47:y:2017:i:c:p:48-63 is not listed on IDEAS
    10. Machado, Cecilia & Szerman, Christiane, 2016. "Centralized Admission and the Student-College Match," IZA Discussion Papers 10251, Institute for the Study of Labor (IZA).
    11. Joshua Goodman, 2017. "The Labor of Division: Returns to Compulsory High School Math Coursework," Working Paper 95966, Harvard University OpenScholar.
    12. Bart H. H. Golsteyn & Anders Stenberg, 2017. "Earnings over the Life Course: General versus Vocational Education," Journal of Human Capital, University of Chicago Press, vol. 11(2), pages 167-212.
    13. Anne Ardila Brenøe, 2018. "Origins of gender norms: sibling gender composition and women's choice of occupation and partner," ECON - Working Papers 294, Department of Economics - University of Zurich.
    14. repec:bla:obuest:v:79:y:2017:i:3:p:426-433 is not listed on IDEAS
    15. repec:eee:pubeco:v:157:y:2018:i:c:p:212-225 is not listed on IDEAS
    16. repec:eee:jeborg:v:148:y:2018:i:c:p:34-45 is not listed on IDEAS
    17. Titan Alon, 2018. "Earning More by Doing Less: Human Capital Specialization and the College Wage Premium," 2018 Meeting Papers 497, Society for Economic Dynamics.
    18. repec:eee:pubeco:v:158:y:2018:i:c:p:79-102 is not listed on IDEAS
    19. Kang, Lili & Peng, Fei & Zhu, Yu, 2018. "Returns to higher education subjects and tiers in China - Evidence from the China Family Panel Studies," GLO Discussion Paper Series 238, Global Labor Organization (GLO).
    20. repec:eee:ecoedu:v:63:y:2018:i:c:p:1-19 is not listed on IDEAS
    21. Evan Riehl & Juan E. Saavedra & Miguel Urquiola, 2018. "Learning and Earning: An Approximation to College Value Added in Two Dimensions," NBER Chapters,in: Productivity in Higher Education National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • 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

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. Field of Study, Earnings, and Self-Selection (QJE 2016) in ReplicationWiki

    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:oup:qjecon:v:131:y:2016:i:3:p:1057-1111.. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press) or (Christopher F. Baum). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.