(Em)Powered by Science? Estimating the Relative Labor Market Returns to Majoring in Science in High School in India

Abstract

Despite widespread belief that majoring in science in high school has a greater payoff in the Indian labor market than majoring in business/humanities, there is no hard evidence to substantiate this thought. Here I provide the first evidence of the causal effect of majoring in science on individuals’ labor market outcomes relative to majoring in business/humanities using microdata from India. Estimating the causal effect, however, is a formidable task since selection into high school major is nonrandom and exclusion restrictions are unavailable. I circumvent these difficulties by employing an econometric technique that does not rely on valid exclusion restriction for identification. I find that majoring in science has a negative causal effect on individuals’ employment probability. Conditional on being employed, however, majoring in science has a positive causal effect on individuals’ earnings and probability of being engaged in a professional occupation. These findings suggest, in contrast to conventional wisdom, the labor market effects of majoring in science in high school in India is not a plain tale of ‘science premium’ - while majoring in science might lead to relatively better labor market outcomes for those who are able to find employment, finding employment itself is more difficult for science majors.