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College Major Choice: Sorting and Differential Returns to Skills

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  • John Eric Humphries

    (University of Chicago)

  • Juanna Joensen

    (University of Chicago)

  • Gregory Veramendi

    (Arizona State University)

Abstract

Does the college major premium reflect returns to prior abilities or college education? We decompose the college major premium into labor market returns to multidimensional abilities (grit, interpersonal, and cognitive) and skills learned in college. This allows us to quantify how much of the college major premium is due to sorting on multi-dimensional abilities and how much is due to the differential labor market value of major-specific skills. We find that sorting on abilities accounts for 10-50\% of the college major premium. We also provide novel estimates of complementarities and interaction effects between abilities and skills, since the returns to abilities vary significantly across college majors. We document that 40\% of students who enter STEM degrees change major or drop out. We evaluate counterfactual policies to promote STEM degrees, accounting for the fact that many who start STEM degrees do not finish.

Suggested Citation

  • 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.
    • Handle: RePEc:red:sed017:1623
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    Cited by:

    1. Fernando Saltiel, 2019. "What's Math Got to Do With It? Multidimensional Ability and the Gender Gap in STEM," 2019 Meeting Papers 1201, Society for Economic Dynamics.
    2. Jiang, Xuan, 2021. "Women in STEM: Ability, preference, and value," Labour Economics, Elsevier, vol. 70(C).
    3. Jiang, Xuan, 2018. "Planting the Seeds for Success: Why Women in STEM Do Not Stick in the Field," MPRA Paper 89650, University Library of Munich, Germany.
    4. Light, Audrey & Wertz, Sydney Schreiner, 2022. "Should English majors take computer science courses? Labor market benefits of the occupational specificity of major and nonmajor college credits," Economics of Education Review, Elsevier, vol. 88(C).

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