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Choosing the Field of Study in Postsecondary Education: Do Expected Earnings Matter?

Author

Listed:
  • Magali Beffy

    (CREST-INSEE, France)

  • Denis Fougère

    (CNRS, CREST-INSEE, France, CEPR, United Kingdom and IZA, Germany)

  • Arnaud Maurel

    (Duke University, CREST-INSEE, France, and IZA, Germany)

Abstract

This paper examines the determinants of the choice of the college major when the length of studies and future earnings are uncertain. We estimate a three-stage schooling decision model, focusing on the effect of expected earnings on major choice. We control for dynamic selection through the use of mixture distributions. Exploiting variations across the French business cycle in the relative returns to the majors, our results yield a very low, though significant, elasticity of major choice to expected earnings. This suggests that at least for the French university context, nonpecuniary factors are a key determinant of schooling choices. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Magali Beffy & Denis Fougère & Arnaud Maurel, 2012. "Choosing the Field of Study in Postsecondary Education: Do Expected Earnings Matter?," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 334-347, February.
    • Handle: RePEc:tpr:restat:v:94:y:2012:i:1:p:334-347
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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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