Higher education and non-pecuniary returns in Germany: tracing the mechanisms behind field of study effects at the start of the career

Abstract

This article addresses the question of why fields of study differ in early labour market returns. It is argued that the higher the potential training costs of a field of study the more problematic the labour market integration of graduates. This is due to the fact that employers use the occupational specificity and selectivity of a study programme as a signal for the expected training costs. In addition, the article suggests that structural relations between fields and occupations act as mediators for the effect of field of study on non-pecuniary returns. Using the German HIS Graduate Panel 1997, the results indicate that a lack of occupational specificity is partly responsible for differences between fields of study. Selectivity measures do not contribute to an explanation. As expected, working in the public sector and the required expertise for a job strongly mediate field of study differences.