The Effect of Superstar Firms on College Major Choice
71 Pages Posted: 15 Mar 2019 Last revised: 5 Sep 2019
Date Written: September 3, 2019
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
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