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  3. American Economic Journal: Applied Economics
  4. April 2022
  5. Will Studying Economics Make You Rich? A Regression Discontinuity Analysis of the Returns to College Major

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

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Abstract

We investigate the wage return to studying economics by leveraging a policy that prevented students with low introductory grades from declaring a major. Students who barely met the grade point average threshold to major in economics earned $22,000 (46 percent) higher annual early-career wages than they would have with their second-choice majors. Access to the economics major shifts students' preferences toward business/finance careers, and about half of the wage return is explained by economics majors working in higher-paying industries. The causal return to majoring in economics is very similar to observational earnings differences in nationally representative data.

Citation

Bleemer, Zachary, and Aashish Mehta. 2022. "Will Studying Economics Make You Rich? A Regression Discontinuity Analysis of the Returns to College Major." American Economic Journal: Applied Economics, 14 (2): 1-22. DOI: 10.1257/app.20200447

Additional Materials

JEL Classification

  • A22 Economic Education and Teaching of Economics: Undergraduate
  • I26 Returns to Education
  • J24 Human Capital; Skills; Occupational Choice; Labor Productivity
  • J31 Wage Level and Structure; Wage Differentials
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