Alternative Estimates of Field of Study on Earnings: Do Majors Matter?

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Project Abstract Recent research has documented a dramatic increase in the college wage premium -- the ratio of the average wage of college graduates to that of high school graduates -- as well as increasing inequality among college educated workers. Significant variation in the wages of college graduates remains unexplained. This Research Planning Grant is made in support of a project that uses the 1993 National Survey of College Graduates to examine the effect of field of study on earnings and the wage structure. This unusually rich data set contains observations on college major, occupation, actual work experience, and salary and can be used to augment our understanding of the effect of higher education on earnings. The research begins by examining whether field of study accounts for the increase in earnings inequality among college graduates. If so, inequality measures that control for field of study should be smaller than those observed for all college graduates. The research then considers whether of field of study and primary work activity narrow the unexplained gender wage gap. Finally, the study addresses the effect of self-selection on estimates of the returns to college major.