Risky Business? The Effect of Majoring in Business on Earnings and Educational Attainment

65 Pages Posted: 17 Jul 2017

See all articles by Rodney Andrews

Rodney Andrews

University of Texas at Dallas

Scott A. Imberman

Michigan State University; Michigan State University - College of Education

Michael Lovenheim

Cornell University - Department of Policy Analysis and Management; National Bureau of Economic Research (NBER)

Date Written: July 2017

Abstract

One of the most important decisions a student can make during the course of his or her college career is the choice of major. The field of study a student selects translates directly into the types of skills and knowledge he or she will obtain during college, and it can influence the type of career chosen after postsecondary education ends. Business is one of the most popular majors in the US, accounting for 19% of all college degrees granted. We study the impact of choosing a business major using a regression discontinuity design that exploits GPA cutoffs for switching majors in some Texas universities. Even though nearly 60% of marginal business majors would have majored in a STEM field otherwise, we find large and statistically significant increases in earnings of 80% to 130% 12+ years after college entry, driven mainly by women. These are considerably larger than OLS estimates that condition on a rich set of demographic, high school achievement, and high school fixed-effects controls, which is consistent with students choosing majors based on comparative advantage. We do not find statistically significant effects of majoring in business on educational outcomes, except for positive effects on male 6-year graduation rates.

Suggested Citation

Andrews, Rodney and Imberman, Scott Andrew and Lovenheim, Michael, Risky Business? The Effect of Majoring in Business on Earnings and Educational Attainment (July 2017). NBER Working Paper No. w23575. Available at SSRN: https://ssrn.com/abstract=3003673

Rodney Andrews (Contact Author)

University of Texas at Dallas ( email )

Scott Andrew Imberman

Michigan State University ( email )

East Lansing, MI 48824
United States

Michigan State University - College of Education ( email )

East Lansing, MI
United States

Michael Lovenheim

Cornell University - Department of Policy Analysis and Management ( email )

Ithaca, NY
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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