Heterogeneity in Human Capital Investments: High School Curriculum, College Major, and Careers

Abstract

Motivated by the large differences in labor market outcomes across college majors, we survey the literature on the demand for and return to high school and postsecondary education by field of study. We combine elements from several papers to provide a dynamic model of education and occupation choice that stresses the roles of the specificity of human capital and uncertainty about preferences, ability, education outcomes, and labor market returns. The model implies an important distinction between the ex ante and ex post returns to education decisions. We also discuss some of the econometric difficulties in estimating the causal effects of field of study on wages in the context of a sequential choice model with learning. Finally, we review the empirical literature on the choice of curriculum and the effects of high school courses and college major on labor market outcomes.

College major, internship experience, and employment opportunities: Estimates from a résumé audit

“…However, research on the effect of specific academic training on labor-market outcomes is relatively sparse. The existing literature focuses on the effects of college attendance, university quality, and degree choice on labor-market outcomes (e.g., Oreopoulos and Petronijevic, 2013;Altonji et al, 2012). These studies also share a common limitation: the choice of academic major could be driven by unobservables that make individuals more or less likely to have success in the labor market.…”

“…8 For example, an applicant who is randomly assigned internship experience would report an internship in the banking sector when applying to a job in the banking industry. 9 Altonji et al (2012) incorporate key elements of existing theoretical research on degree choice to develop a model in which specific areas of study are sequentially chosen when an agent is uncertain about his/her future wages, learning ability, and preferences for different fields of study and occupations. The complexity of sequential-choice models render them difficult to estimate without making simplifying assumptions and recent literature has attempted to bridge this gap (e.g., Arcidiacono et al, 2012).…”

The Effects of High School Peers’ Gender on College Major, College Performance and Income

“…Instead, men represent a minority in the Humanities and Education majors, which we will call "Prevalently Female (PF) Majors". 1 These differences in the choice of college major accounts for a significant part of the existing male-female wage gap (Altonji et al 2012) because the jobs usually available after graduation from PM majors pay more than those typically taken after graduating in PF majors. However, college majors are chosen based on preferences, expectations and comparative skills, and it is not clear that exogenously shifting people into PM majors would improve their labor market outcomes.…”

The Puzzling Effects of Delaying Schooling on Canadian Wages

“…Leigh and Gill (1997) answer the same question but focus on older individuals, for whom they find higher returns on formal certification. Altonji, Blom, and Meghir (2012) discuss the evidence reporting substantial variance in the returns on different majors, even after accounting for tested ability and labour market participation. Our work relates to this line of investigation but focuses specifically on interruptions in the educational path.…”