Predicted Future Earnings and Choice of College Major

Using Data from the National Longitudinal Survey of Young Men, the author of this paper examines the relationship between predicted future earnings for five broad fields of study and college students' choice of major. Conditional logit models of major choice that incorporate alternative predicted earnings variables are specified and estimated. The results indicate that, holding family background characteristics constant, individuals are likely to choose majors offering greater streams of future earnings rather than, as some have argued, majors with higher beginning earnings at the time of the choice. It is also found that earnings profiles corrected for self-selection bias have flattened for more recent graduates in business, liberal arts, and education. The life-cycle earnings in these disciplines appear to be more severely depressed than those in science and engineering.