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The Effect of the Business Cycle on Freshman Major Choice

  • Bradley, Elizabeth S.

During economic downturns, college students can alter their postsecondary education decisions through several channels. This paper focuses on college major choice, one higher education decision that might change after a recession, and one that few researchers have explored. Due to data limitations, previous research is unable to provide definitive results on if, or how, matriculating freshmen change college majors during recessions. The data used for this study assuages those limitations and is obtained from the "Freshman Survey," administered by the Cooperative Institutional Research Program (CIRP). Building on what is already known about how students choose college majors and how they respond to information shocks, the theoretical model proposes that during economic downturns, students will switch to fields with higher relative wage and employment opportunities. First, this study finds that freshmen are less likely to have undeclared intended majors after recessions. Then, a multinomial logit empirical technique strongly suggests that after economic downturns, those who declare intended majors are more likely to choose ones that offer higher wages and provide more job security, like Technology, Business, Engineering and Health. University administrators can apply this empirical model to their own institutional-level data. In the presence of substantial budget cuts, administrators can anticipate the majors that will require more resources and those from which they can transfer resources to efficiently meet student demand. More broadly, these conclusions offer better information on labor force composition after recessions, which can enhance forecasting of likely shortages and surpluses in the labor market.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 42412.

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Date of creation: 25 Oct 2012
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Handle: RePEc:pra:mprapa:42412
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  1. Todd Stinebrickner & Ralph Stinebrickner, 2011. "Math or Science? Using Longitudinal Expectations Data to Examine the Process of Choosing a College Major," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20111, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
  2. Goldin, Claudia, 1999. "Egalitarianism and the Returns to Education during the Great Transformation of American Education," Scholarly Articles 2623652, Harvard University Department of Economics.
  3. Robert Jensen, 2010. "The (Perceived) Returns to Education and the Demand for Schooling," The Quarterly Journal of Economics, Oxford University Press, vol. 125(2), pages 515-548.
  4. Plutarchos Sakellaris & Antonio Spilimbergo, 1999. "Business Cycles and Investment in Human Capital: International Evidence on Higher Education," Electronic Working Papers 99-009, University of Maryland, Department of Economics.
  5. Brunello, Giorgio & Winter-Ebmer, Rudolf, 2003. "Why do students expect to stay longer in college? Evidence from Europe," Economics Letters, Elsevier, vol. 80(2), pages 247-253, August.
  6. Arcidiacono, Peter, 2002. "Ability Sorting and the Returns to College Major," Working Papers 02-26, Duke University, Department of Economics.
  7. Bradley, Elizabeth S., 2012. "The Effect of the Business Cycle on Freshman Major Choice," MPRA Paper 42412, University Library of Munich, Germany.
  8. Rumberger, Russell W. & Thomas, Scott L., 1993. "The economic returns to college major, quality and performance: A multilevel analysis of recent graduates," Economics of Education Review, Elsevier, vol. 12(1), pages 1-19, March.
  9. Matthew Wiswall & Basit Zafar, 2011. "Belief updating among college students: evidence from experimental variation in information," Staff Reports 516, Federal Reserve Bank of New York.
  10. Mattila, J Peter, 1982. "Determinants of Male School Enrollments: A Time-Series Analysis," The Review of Economics and Statistics, MIT Press, vol. 64(2), pages 242-51, May.
  11. Messer, Dolores & Wolter, Stefan C., 2007. "Time-to-Degree and the Business Cycle," IZA Discussion Papers 2787, Institute for the Study of Labor (IZA).
  12. 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.
  13. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
  14. Kathy Cannings & Sophie Mahseredjian & Claude Montmarquette, 1997. "How Do Young People Choose College Majors ?," CIRANO Working Papers 97s-38, CIRANO.
  15. 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.
  16. Mattila, J. Peter, 1982. "Determinants of Male School Enrollments, A Time-Series Analysis," Staff General Research Papers 10849, Iowa State University, Department of Economics.
  17. Beffy, Magali & Fougère, Denis & Maurel, Arnaud, 2009. "Choosing the Field of Study in Post-Secondary Education: Do Expected Earnings Matter?," IZA Discussion Papers 4127, Institute for the Study of Labor (IZA).
  18. N/A, 2009. "On the Recession," Local Economy, London South Bank University, vol. 24(3), pages 253-253, May.
  19. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
  20. 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.
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