The Major Decision: Labor Market Implications of the Timing of Specialization in College

Résumé

Abstract: Is American college education too general? This paper explores the role broad college curriculums play in helping students discover their com- parative advantage. We model higher education as an exploration-exploitation tradeoff: broad, multi-subject education helps students discover their compar- ative advantage, while specialized education is better rewarded on the labor market. How well-informed students are when they choose their major impacts labor market returns through two channels: whether they choose to work in the field of their comparative advantage, and whether this field is related to their studies. We estimate the model through simulated method of moments. Using detailed transcript data from a panel of US college graduates, we infer each student’s timing of specialization based on their course choices. Our estimates show that observed specialization behavior, and subsequent labor market out- comes, are consistent with the proposed tradeoff: broad studies are informative, yet education is imperfectly transferable across fields of work. We use these re- sults to explore a counterfactual education system where students are required to specialize at college entry. (joint with Luc Bridet, TSE)