IDEAS home Printed from https://ideas.repec.org/p/ubc/clssrn/clsrn_admin-2009-62.html
   My bibliography  Save this paper

Do Education Decisions Respond to Returns by Field of Study?

Author

Listed:
  • Gunderson, Morley
  • Krashinsky, Harry

Abstract

We utilize the 2000 cohort of university graduates from the National Graduate Survey (NGS) to estimate the extent to which the choice of field of study is influenced by expected returns to those fields of study. The expected returns are based on earnings equations estimated from the earlier 1990 NGS cohort for the years 1992 and 1995 -- years that are around the time when the 2000 cohort would be applying to university and forming expectations of their expected returns by field of study. We estimate those expected returns using conventional OLS earnings equations as well as IV estimates to account for the potential endogeneity of the returns by field of study since selection effects may bias the expected returns. Our IV estimates utilize measures of skill-biased technological change as instruments. Overall, our results suggest that prospective students do choose fields of study in part at least on the basis of earnings they can expect to receive in those fields. Furthermore, earnings expectations formed around the time they are applying are more influential than earnings expectations based on years further away from that time, although both generally have an impact on the choice of field of study.

Suggested Citation

  • Gunderson, Morley & Krashinsky, Harry, 2009. "Do Education Decisions Respond to Returns by Field of Study?," CLSSRN working papers clsrn_admin-2009-62, Vancouver School of Economics, revised 28 Nov 2009.
  • Handle: RePEc:ubc:clssrn:clsrn_admin-2009-62
    as

    Download full text from publisher

    File URL: http://www.clsrn.econ.ubc.ca/workingpapers/CLSRN%20Working%20Paper%20no.%2047%20-%20Gunderson%20and%20Krashinsky.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Botelho, Anabela & Pinto, Ligia Costa, 2004. "Students' expectations of the economic returns to college education: results of a controlled experiment," Economics of Education Review, Elsevier, vol. 23(6), pages 645-653, December.
    2. Zarkin, Gary A., 1983. "Cobweb versus rational expectations models : Lessons from the market for public school teachers," Economics Letters, Elsevier, vol. 13(1), pages 87-95.
    3. Boudarbat, Brahim, 2008. "Field of study choice by community college students in Canada," Economics of Education Review, Elsevier, vol. 27(1), pages 79-93, February.
    4. Chiha, Yvana A. & Link, Charles R., 2003. "The shortage of registered nurses and some new estimates of the effects of wages on registered nurses labor supply: a look at the past and a preview of the 21st century," Health Policy, Elsevier, vol. 64(3), pages 349-375, June.
    5. Arcidiacono, Peter, 2004. "Ability sorting and the returns to college major," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 343-375.
    6. Loury, Linda Datcher & Garman, David, 1995. "College Selectivity and Earnings," Journal of Labor Economics, University of Chicago Press, vol. 13(2), pages 289-308, April.
    7. Daron Acemoglu, 1998. "Why Do New Technologies Complement Skills? Directed Technical Change and Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1055-1089.
    8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    9. George E. Johnson, 1997. "Changes in Earnings Inequality: The Role of Demand Shifts," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 41-54, Spring.
    10. Montmarquette, Claude & Cannings, Kathy & Mahseredjian, Sophie, 2002. "How do young people choose college majors?," Economics of Education Review, Elsevier, vol. 21(6), pages 543-556, December.
    11. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    12. Paul M. Romer, 2001. "Should the Government Subsidize Supply or Demand in the Market for Scientists and Engineers?," NBER Chapters,in: Innovation Policy and the Economy, Volume 1, pages 221-252 National Bureau of Economic Research, Inc.
    13. Julian R. Betts, 1996. "What Do Students Know about Wages? Evidence from a Survey of Undergraduates," Journal of Human Resources, University of Wisconsin Press, vol. 31(1), pages 27-56.
    14. Gary A. Zarkin, 1985. "Occupational Choice: An Application to the Market for Public School Teachers," The Quarterly Journal of Economics, Oxford University Press, vol. 100(2), pages 409-446.
    15. Blakemore, Arthur E & Low, Stuart A, 1984. "Sex Differences in Occupational Selection: The Case of College Majors," The Review of Economics and Statistics, MIT Press, vol. 66(1), pages 157-163, February.
    16. Charles F. Manski, 1993. "Adolescent Econometricians: How Do Youth Infer the Returns to Schooling?," NBER Chapters,in: Studies of Supply and Demand in Higher Education, pages 43-60 National Bureau of Economic Research, Inc.
    17. Marie Lavoie & Ross Finnie, 1999. "Is It Worth Doing a Science or Technology Degree in Canada? Empirical Evidence and Policy Implications," Canadian Public Policy, University of Toronto Press, vol. 25(1), pages 101-121, March.
    18. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January.
    19. Jeff Grogger & Eric Eide, 1995. "Changes in College Skills and the Rise in the College Wage Premium," Journal of Human Resources, University of Wisconsin Press, vol. 30(2), pages 280-310.
    20. Freeman, Richard B, 1975. "Legal "Cobwebs": A Recursive Model of the Market for New Lawyers," The Review of Economics and Statistics, MIT Press, vol. 57(2), pages 171-179, May.
    21. James, Estelle, et al, 1989. "College Quality and Future Earnings: Where Should You Send Your Child to College?," American Economic Review, American Economic Association, vol. 79(2), pages 247-252, May.
    22. Leonard, Jonathan S, 1982. "Wage Expectations in the Labor Market: Survey Evidence on Rationality," The Review of Economics and Statistics, MIT Press, vol. 64(1), pages 157-161, February.
    23. Jack Fiorito & Robert C. Dauffenbach, 1982. "Market and Nonmarket Influences on Curriculum Choice by College Students," ILR Review, Cornell University, ILR School, vol. 36(1), pages 88-101, October.
    24. Francois Vaillancourt, 1995. "The Private and Total Returns to Education in Canada, 1985," Canadian Journal of Economics, Canadian Economics Association, vol. 28(3), pages 532-554, August.
    25. Siow, Aloysius, 1984. "Occupational Choice under Uncertainty," Econometrica, Econometric Society, vol. 52(3), pages 631-645, May.
    26. David H. Autor & Lawrence F. Katz & Alan B. Krueger, 1998. "Computing Inequality: Have Computers Changed the Labor Market?," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1169-1213.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Education decisions; field of study; returns to education; multi-nomial logits; National Graduate Survey (NGS);

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ubc:clssrn:clsrn_admin-2009-62. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vivian Tran). General contact details of provider: http://www.clsrn.econ.ubc.ca/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.