Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data
26 Pages Posted: 7 May 2019 Last revised: 29 Apr 2020
Date Written: 2019-05-07
We examine how a studentâ€™s major and the institution attended contribute to the labor market outcomes of young graduates. Administrative panel data that combine student transcripts with matched employer-employee records allow us to provide the first decomposition of premia into individual and firm-specific components. We find that both major and institutional premia are more strongly related to the firm-specific component of wages than the individual-specific component of wages. On average, a studentâ€™s major is a more important predictor of future wages than the selectivity of the institution attended, but major premia (and their relative ranking) can differ substantially across institutions, suggesting the importance of program-level data for prospective students and their parents.
Keywords: college quality, returns to major, firm-specific premium
JEL Classification: I23, I24, I26
Suggested Citation: Suggested Citation