The return to studying economics is fairly high

Selection bias may confound the identification of field-specific returns to higher education. This study investigates the wage return to studying economics by leveraging a policy that prevented students with low introductory grades from declaring the major. Regression discontinuity estimates show that policy-complying economics majors — who appear representative on observables — earned $22,000 (58%) higher annual early-career wages than they would have with their second-choice majors, despite otherwise-unchanged educational investment and attainment. Cross-industry wage variation explains half of the return, with economics majors channeled towards high-wage economics-related industries. Differences between institution-specific or nationally-representative average wages by major well-approximate the estimated causal return.

That is from a new paper by Zachary Bleemer and Aashish Mehta, via the excellent Kevin Lewis.


Comments for this post are closed