Sectoral Shocks and Gendered Responses in Higher Education: Evidence from the Dot-Com Collapse

This paper studies how a sector-specific shock, the dot-com collapse, shaped gender differences in field-of-study choice in a manner consistent with heightened perceived risk in the information technology (IT) sector. I develop a model of field choice under uncertainty in which students differ in risk aversion by gender. When sectoral risk increases, more risk-averse individuals require higher expected returns to enter the risky field, leading to lower female participation, positive selection among those who remain, and reallocation toward close substitutes. Drawing on Swedish administrative data for cohorts graduating between 1997 and 2007, I find that the IT bust widened the female-male gap in IT graduation by about five percentage points, a relative increase of roughly 50 percent. Among those still entering IT, women became more positively selected, with average GPA ranks rising by about three percentile points relative to men. Conditional on holding an IT degree, women were roughly ten percentage points less likely than men to enter IT employment one year after graduation. Women who left IT disproportionately shifted into engineering, a STEM substitute with comparable returns but lower perceived volatility. These findings show that sector-specific risk amplifies gender segregation not only by reducing participation but also by altering the composition and allocation of talent across fields. More broadly, the results highlight that gender gaps in STEM evolve with economic conditions: sectoral downturns can reinforce existing disparities by diverting high ability women away from volatile but high return industries.