Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data

26 Pages Posted: 7 May 2019 Last revised: 29 Apr 2020

See all articles by Ben Ost

Ben Ost

University of Illinois at Chicago

Weixiang Pan

Georgia State University

Douglas A. Webber

Temple University - Department of Economics

Date Written: 2019-05-07

Abstract

We examine how a student’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 student’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

Ost, Ben and Pan, Weixiang and Webber, Douglas A., Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data (2019-05-07). FRB of Philadelphia Working Paper No. 19-24, Available at SSRN: https://ssrn.com/abstract=3384175 or http://dx.doi.org/10.21799/frbp.wp.2019.24

Ben Ost (Contact Author)

University of Illinois at Chicago ( email )

Weixiang Pan

Georgia State University ( email )

35 Broad Street
Atlanta, GA 30303-3083
United States

Douglas A. Webber

Temple University - Department of Economics ( email )

Philadelphia, PA 19122
United States

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