Major Choices: Students' Beliefs About Labor Market Outcomes

Paper Session

Sunday, Jan. 8, 2017 1:00 PM – 3:00 PM

Swissotel Chicago, Zurich B
Hosted By: American Economic Association
  • Chair: Ioana Marinescu, University of Chicago

The Effect of Labor Market Information on Community College Students' Choice of Major

Rachel Baker
,
University of California-Irvine
Eric Bettinger
,
Stanford University
Brian Jacob
,
University of Michigan
Ioana Marinescu
,
University of Chicago

Abstract

An important goal of community colleges is to prepare students for the labor market. But are students aware of the labor market outcomes in different majors? And how much do students weigh labor market outcomes when choosing a major? In this study we find that less than 40% of community college students in California rank broad majors accurately in terms of labor market outcomes. Moreover, students believe that salaries are 13 percent higher than they actually are, on average, and students underestimate the probability of being employed by almost 25 percent. The main determinants of major choice are beliefs about course enjoyment and grades, but expected labor market outcomes also matter. Experimental estimates of the impact of expected labor market outcomes are larger than OLS estimates and show that a 1% increase in salary is associated with a 1.4 to 1.8% increase in the probability of choosing a broad major.

The Effects of the College Scorecard on the Search for Colleges

Nick Huntington-Klein
,
California State University-Fullerton

Abstract

The College Scorecard is a website launched by the U.S. Department of Education in September 2015 that provides information about different colleges. This paper studies the effects of the website on interest in colleges, calculating both intent-to-treat and a local average treatment effect estimates of the effect of the College Scorecard. Interest is measured using Google search activity. The Scorecard led to more searches for keywords associated with high-earnings, high-graduation rate, and low-tuition colleges. However, the size of the effect is very small.

Ex Ante Returns and Occupational Choice

Peter Arcidiacono
,
Duke University
Joseph Hotz
,
Duke University
Arnaud Maurel
,
Duke University
Teresa Romano
,
Goucher College

Abstract

We show that data on subjective expectations, especially on outcomes from counterfactual choices and choice probabilities, are a powerful tool in recovering ex ante treatment effects as well the relationship between individual choices and expected gains to treatment. In this paper we focus on the choice of occupation, and use elicited beliefs from a sample of male undergraduates at Duke University. By asking individuals about potential earnings associated with counterfactual choices of college majors and occupations, we can recover the distribution of the ex ante returns to particular occupations, and how these returns vary across majors. We also examine how students update their beliefs over the course of college. We find large differences in expected earnings across occupations, and substantial heterogeneity across individuals in the corresponding ex ante returns. Our results also point to the existence of sizable complementarities between college major and occupations. Finally, we show that the ex ante returns that were measured while the individuals were still in college are informative about their actual occupational choices.
Discussant(s)
Seth Zimmerman
,
University of Chicago
Basit Zafar
,
Federal Reserve Bank of New York
JEL Classifications
  • D8 - Information, Knowledge, and Uncertainty
  • I2 - Education and Research Institutions