Long-Run Returns to Field of Study in Secondary School

54 Pages Posted: 29 Jul 2020

See all articles by Gordon B. Dahl

Gordon B. Dahl

UC San Diego - Department of Economics; National Bureau of Economic Research (NBER); University of Rochester - Department of Economics

Dan-Olof Rooth

University of Kalmar; IZA Institute of Labor Economics

Anders Stenberg

Stockholm University

Multiple version iconThere are 2 versions of this paper

Abstract

This paper studies whether specialized academic fields of study in secondary school, which are common in many countries, affect earnings as an adult. Identification is challenging, because it requires not just quasi-random variation into fields of study, but also an accounting of individuals' next-best alternatives. Our setting is Sweden, where at the end of ninth grade students rank fields of study and admissions to oversubscribed fields is determined based on a student's GPA.We use a regression discontinuity design which allows for different labor market returns for each combination of preferred versus next-best choice, together with nationwide register data for school cohorts from 1977-1991 linked to their earnings as adults. Our analysis yields four main findings. First, Engineering, Natural Science, and Business yield higher earnings relative to most second-best choices, while Social Science and Humanities result in sizable drops, even relative to non-academic vocational programs. Second, the return to completing a field varies substantially as a function of a student's next-best alternative. The magnitudes are often as large as estimates of the return to two years of additional education.Third, the pattern of returns for individuals with different first and second best choices is consistent with comparative advantage for many field choice combinations, while others exhibit either random sorting or comparative disadvantage. Fourth, most of the differences in adult earnings can be attributed to differences in college major and occupation. Taken together, these results highlight that the field choices students make at age 16, when they may have limited information about their skills and the labor market, have effects which last into adulthood.

Keywords: field of study, secondary education, comparative advantage

JEL Classification: I26, J24, J31

Suggested Citation

Dahl, Gordon B. and Rooth, Dan-Olof and Stenberg, Anders, Long-Run Returns to Field of Study in Secondary School. IZA Discussion Paper No. 13508, Available at SSRN: https://ssrn.com/abstract=3660254

Gordon B. Dahl (Contact Author)

UC San Diego - Department of Economics ( email )

9500 Gilman Drive
Mail Code 0502
La Jolla, CA 92093-0112
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of Rochester - Department of Economics

Harkness Hall
Rochester, NY 14627
United States

Dan-Olof Rooth

University of Kalmar ( email )

Sweden

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Anders Stenberg

Stockholm University

Universitetsvägen 10
Stockholm, SE-106 91
Sweden

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
5
Abstract Views
55
PlumX Metrics