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

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.

[1]  Petra E. Todd,et al.  On the Specification and Estimation of the Production Function for Cognitive Achievement , 2003 .

[2]  L. Loury,et al.  College Selectivity and Earnings , 1995, Journal of Labor Economics.

[3]  J. Meer.  Evidence on the returns to secondary vocational education , 2007 .

[4]  Mark C. Berger,et al.  Predicted Future Earnings and Choice of College Major , 1988 .

[5]  J. Joensen,et al.  The Risk-Return Trade-Off in Human Capital Investment , 2006 .

[6]  Rebecca M. Blank,et al.  Race and gender in the labor market , 1999 .

[7]  Petra E. Todd,et al.  Marriage, partnership and sexual orientation: a study of British university academics and administrators , 2007, Journal of Human Capital.

[8]  Todd R. Stinebrickner,et al.  Math or Science? Using Longitudinal Expectations Data to Examine the Process of Choosing a College Major , 2011 .

[9]  M. Keane,et al.  The Career Decisions of Young Men , 1997, Journal of Political Economy.

[10]  J. Angrist,et al.  Identification and Estimation of Local Average Treatment Effects , 1995 .

[11]  Richard B. Freeman,et al.  A Cobweb Model of the Supply and Starting Salary of New Engineers , 1976 .

[12]  Charles F. Manski,et al.  Institute for Research on Poverty Discussion Papers , 2022 .

[13]  John Robst,et al.  Education and job match: The relatedness of college major and work , 2007 .

[14]  Robert S Gibbons,et al.  Learning and Wage Dynamics , 1991 .

[15]  James J. Heckman,et al.  Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males , 1998, Journal of Political Economy.

[16]  Lowell J. Taylor,et al.  The Economic Reward for Studying Economics , 2003 .

[17]  R. Layard,et al.  The causes of unemployment , 1983 .

[18]  Jeannie Oakes,et al.  Multiplying Inequalities: The Effects of Race, Social Class, and Tracking on Opportunities to Learn Mathematics and Science , 1990 .

[19]  J. Joensen,et al.  Is there a Causal Effect of High School Math on Labor Market Outcomes? , 2006, The Journal of Human Resources.

[20]  David Card.  The Causal Effect of Education on Learning , 1999 .

[21]  Excellence In Education.  A Nation at Risk: The Imperative for Educational Reform , 2013 .

[22]  Sex Differences in Occupational Selection: The Case of College Majors , 1984 .

[23]  E. Hanushek,et al.  Handbook of the Economics of Education , 2006 .

[24]  Kevin Stange,et al.  An Empirical Investigation of the Option Value of College Enrollment , 2012 .

[25]  Amelia Haviland,et al.  Why Do Minority Men Earn Less? A Study of Wage Differentials among the Highly Educated , 2006, The Review of Economics and Statistics.

[26]  K. Wolpin,et al.  The Specification and Estimation of Dynamic Stochastic Discrete Choice Models: A Survey , 1989 .

[27]  Thomas P. Dick,et al.  Factors and influences on high school students' career choices. , 1991 .

[28]  G. Violante,et al.  Education Decisions, Equilibrium Policies and Wages Dispersion , 2005 .

[29]  Derek A. Neal.  The Complexity of Job Mobility Among Young Men , 1998 .

[30]  Estelle James,et al.  College Quality and Future Earnings: Where Should You Send Your Child to College? , 1989 .

[31]  C. Meghir,et al.  Econometric Methods for Research in Education , 2010 .

[32]  J. Zietz,et al.  Academic Choice Behavior of High School Students: Economic Rationale and Empirical Evidence. , 2005 .

[33]  Ben Ost.  The role of peers and grades in determining major persistence in the sciences , 2010 .

[34]  L. Dickson.  Race and Gender Differences in College Major Choice , 2010 .

[35]  William G. Bowen,et al.  Choice of Major: The Changing (Unchanging) Gender Gap , 1999 .

[36]  James J. Heckman,et al.  Using Longitudinal Data to Estimate Age, Period and Cohort Effects in Earnings Equations , 1985 .

[37]  College choice and entry exams , 2010 .

[38]  Dimitriy V. Masterov,et al.  The Productivity Argument for Investing in Young Children , 2007 .

[39]  Charles F. Manski,et al.  Schooling as experimentation: a reappraisal of the postsecondary dropout phenomenon☆ , 1989 .

[40]  Bo E. Honoré,et al.  The Empirical Content of the Roy Model , 1990 .

[41]  Basit Zafar,et al.  How Do College Students Form Expectations? , 2011, Journal of Labor Economics.

[42]  Catherine J. Weinberger.  Mathematical College Majors and the Gender Gap in Wages , 1999 .

[43]  basit. zafar.  College Major Choice and the Gender Gap , 2009, The Journal of Human Resources.

[44]  Shintaro Yamaguchi.  Tasks and Heterogeneous Human Capital , 2011 .

[45]  Anthony M. Rufolo,et al.  Heterogeneous Human Capital, Occupational Choice, and Male-Female Earnings Differences , 1990, Journal of Labor Economics.

[46]  J. Betts,et al.  The Effect of High School Courses on Earnings , 2004, Review of Economics and Statistics.

[47]  Lisa B. Kahn,et al.  The Long-Term Labor Market Consequences of Graduating from College in a Bad Economy , 2006 .

[48]  Burton A. Weisbrod,et al.  Education and Investment in Human Capital , 1962, Journal of Political Economy.

[49]  Peter J. Denning,et al.  A nation at risk: the imperative for educational reform , 1983, CACM.

[50]  Jeffrey T. Grogger,et al.  Changes in College Skills and the Rise in the College Wage Premium , 1995 .

[51]  B. Dalton,et al.  Trends among High School Seniors, 1972-2004. NCES 2008-320. , 2008 .

[52]  James J. Heckman,et al.  Estimating the Technology of Cognitive and Noncognitive Skill Formation , 2010, Econometrica : journal of the Econometric Society.

[53]  John C. Ham,et al.  The Collective Impact of Sectoral Shocks on Aggregate Employment Fluctuations , 1987 .

[54]  C. Montmarquette,et al.  How do Young People Choose College Majors , 2002 .

[55]  Theodore Papageorgiou.  Learning Your Comparative Advantages , 2014 .

[56]  Joseph G. Altonji.  The Effects of High School Curriculum on Education and Labor Market Outcomes , 1992 .

[57]  Paul Oyer,et al.  Initial Labor Market Conditions and Long-Term Outcomes for Economists , 2006 .

[58]  Raven E. Saks,et al.  Risk and Career Choice , 2005 .

[59]  P. Levine,et al.  The Benefit of Additional High-School Math and Science Classes for Young Men and Women , 1995 .

[60]  A. Siow,et al.  Occupational Choice under Uncertainty , 1984 .

[61]  Ofer Malamud.  Discovering One's Talent: Learning from Academic Specialization , 2009 .

[62]  basit. zafar.  How Do College Students Form Expectations? , 2009, Journal of Labor Economics.

[63]  S. Mullainathan,et al.  Affirmative Action in Education: Evidence from Engineering College Admissions in India , 2008 .

[64]  Sophia Catsambis.  The Path to Math: Gender and Racial-Ethnic Differences in Mathematics Participation from Middle School to High School. , 1994 .

[65]  J. Betts.  What Do Students Know about Wages? Evidence from a Survey of Undergraduates , 1996 .

[66]  Fabian Lange,et al.  The Speed of Employer Learning , 2007, Journal of Labor Economics.

[67]  G. Waehrer,et al.  The role of the option value of college attendance in college major choice , 1998 .

[68]  Joseph G. Altonji.  Intertemporal Substitution in Labor Supply: Evidence from Micro Data , 1986, Journal of Political Economy.

[69]  Christina Gathmann,et al.  How General Is Human Capital? A Task‐Based Approach , 2007, Journal of Labor Economics.

[70]  Peter S. Arcidiacono.  Ability Sorting and the Returns to College Major , 2004 .

[71]  Daniel S. Hamermesh,et al.  The effect of college curriculum on earnings: An affinity identifier for non-ignorable non-response bias , 2008 .

[72]  Peter Arcidiacono,et al.  Modeling College Major Choices Using Elicited Measures of Expectations and Counterfactuals , 2010, SSRN Electronic Journal.

[73]  Harvey S. Rosen,et al.  Following in Her Footsteps? Faculty Gender Composition and Women's Choices of College Majors , 1995 .

[74]  J. Goodman.  The Labor of Division: Returns to Compulsory Math Coursework , 2012 .

[75]  S. G. Allen.  Unions and Job Security in the Public Sector , 1986 .

[76]  Lawrence F. Katz,et al.  The Homecoming of American College Women: The Reversal of the Gender Gap in College , 2006 .

[77]  Marc Frenette,et al.  Earning differences by major field of study: evidence from three cohorts of recent Canadian graduates , 2003 .

[78]  P. Hagelstein,et al.  Editorial Board , 1996, Mechanisms of Development.

[79]  J. Heckman,et al.  The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior , 2006, Journal of Labor Economics.

[80]  David Card,et al.  Using Geographic Variation in College Proximity to Estimate the Return to Schooling , 1993 .

[81]  Erik Altman,et al.  Program Committee , 2004, Evolvable Hardware.

[82]  Joseph G. Altonji.  The Intertemporal Substitution Model of Labour Market Fluctuations: An Empirical Analysis , 1982 .

[83]  Joan Z. Spade,et al.  CURRICULUM TRACKING AND STATUS MAINTENANCE , 1987 .

[84]  R. Quandt.  A New Approach to Estimating Switching Regressions , 1972 .

[85]  J. Angrist,et al.  Identification and Estimation of Local Average Treatment Effects , 1994 .

[86]  H. Ayalon.  Math as a Gatekeeper: Ethnic and Gender Inequality in Course Taking of the Sciences in Israel , 1995, American Journal of Education.

[87]  David Kjellberg.  Measuring Expectations , 1999, Identification Problems in the Social Sciences.

[88]  Joseph G. Altonji,et al.  Do Wages Rise with Job Seniority? , 1985 .

[89]  Paul J. Andrisani,et al.  Job Preferences, College Major, and the Gender Gap in Earnings , 1984 .

[90]  Michelle Melton,et al.  What's It Worth? The Economic Value of College Majors. , 2011 .

[91]  Gender Wage Disparities among the Highly Educated , 2012 .

[92]  Lawrence F. Katz,et al.  The Homecoming of American College Women: The Reversal of the College Gender Gap , 2006 .

[93]  Scott L. Thomas,et al.  The economic returns to college major, quality and performance: A multilevel analysis of recent graduates , 1993 .

[94]  C. Pierret,et al.  Employer Learning and Statistical Discrimination , 1997 .

[95]  The Demand for and Return to Education When Education Outcomes are Uncertain , 1991, Journal of Labor Economics.

[96]  F. Mañé.  Trends in the payoff to academic and occupation-specific skills: the short and medium run returns to academic and vocational high school courses for non-college-bound students , 1999 .

[97]  Chris Robinson,et al.  Human Capital Specificity: Evidence from the Dictionary of Occupational Titles and Displaced Worker Surveys, 1984–2000 , 2008, Journal of Labor Economics.

[98]  J. Currie.  Healthy, Wealthy, and Wise: Socioeconomic Status, Poor Health in Childhood, and Human Capital Development , 2008 .