Will Studying Economics Make You Rich? A Regression Discontinuity Analysis of the Returns to College Major

42 Pages Posted: 20 May 2020

See all articles by Zachary Bleemer

Zachary Bleemer

University of California - Department of Economics

Aashish Mehta

University of California, Santa Barbara (UCSB)

Date Written: April 2020

Abstract

Selection bias may confound the identification of field-specific returns to higher education. This study investigates the wage return to studying economics by leveraging a policy that prevented students with low introductory grades from declaring the major. Regression discontinuity estimates show that policy-complying economics majors — who appear representative on observables — earned $22,000 (58%) higher annual early-career wages than they would have with their second-choice majors, despite otherwise-unchanged educational investment and attainment. Cross-industry wage variation explains half of the return, with economics majors channeled towards high-wage economics-related industries. Differences between institution-specific or nationally-representative average wages by major well-approximate the estimated causal return.

Keywords: Economics of Education, College Major, Higher Education

JEL Classification: A22,I26,J24,J31

Suggested Citation

Bleemer, Zachary and Mehta, Aashish Sunil, Will Studying Economics Make You Rich? A Regression Discontinuity Analysis of the Returns to College Major (April 2020). Available at SSRN: https://ssrn.com/abstract=3583165 or http://dx.doi.org/10.2139/ssrn.3583165

Zachary Bleemer (Contact Author)

University of California - Department of Economics ( email )

Berkeley, CA
United States

Aashish Sunil Mehta

University of California, Santa Barbara (UCSB) ( email )

Santa Barbara, CA 93106
United States

HOME PAGE: http://www.global.ucsb.edu/people/aashish-mehta

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