The Effect of Superstar Firms on College Major Choice

71 Pages Posted: 15 Mar 2019 Last revised: 5 Sep 2019

See all articles by Darwin Choi

Darwin Choi

The Chinese University of Hong Kong (CUHK) - CUHK Business School

Dong Lou

London School of Economics & Political Science (LSE); Centre for Economic Policy Research (CEPR)

Abhiroop Mukherjee

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Multiple version iconThere are 2 versions of this paper

Date Written: September 3, 2019

Abstract

We study the effect of superstar firms on an important human capital decision---college students' major choice. Salient occurrences of superstar performers in an industry are followed by a significant rise in the number of college students choosing to major in related fields. This effect remains significant after controlling for lagged industry returns and wages. Students' tendency to follow superstars, however, results in lower real wages earned by entry-level employees when these students enter the job market. Further evidence from the National Survey of College Graduates shows that this adverse impact on career outcomes can last for decades.

Keywords: Salience, College Major Choice, Human Capital Investment, Superstars, Skewness

JEL Classification: D81, D91, G40, I23, J24

Suggested Citation

Choi, Darwin and Lou, Dong and Mukherjee, Abhiroop, The Effect of Superstar Firms on College Major Choice (September 3, 2019). 9th Miami Behavioral Finance Conference 2018. Available at SSRN: https://ssrn.com/abstract=2845711 or http://dx.doi.org/10.2139/ssrn.2845711

Darwin Choi (Contact Author)

The Chinese University of Hong Kong (CUHK) - CUHK Business School ( email )

Cheng Yu Tung Building
12 Chak Cheung Street
Shatin, N.T.
Hong Kong

Dong Lou

London School of Economics & Political Science (LSE) ( email )

Department of Finance
Houghton Street
London, WC2A 2AE
United Kingdom
+44 (0)207 1075360 (Phone)

HOME PAGE: http://personal.lse.ac.uk/loud/

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Abhiroop Mukherjee

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

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