Private Returns to Specific College Majors

Abstract

This chapter examines patterns and trends in the private returns to specific college majors. The returns to investment in college may vary both across majors and over time for a number of reasons. The individuals in different fields may have different abilities and skills so that they are paid different amounts in the labor market. Changes in the structure of the economy or business cycle influences may cause the demand by employers for different fields to vary over time, leading to changes in wage differences between fields. Discrimination may lead to female—male differences in the returns to specific majors. Supply side factors may also be at work. There may be changes in the number of individuals choosing to attend college, leading to wage changes over time. The relative wages of college graduates will be affected by these supply side changes depending on their complementarity with other types of workers. And the private monetary returns to specific majors may vary because of differences in fringe benefits or nonpecuniary returns. Some majors may qualify individuals for jobs with attractive fringe benefits or pleasant working conditions. These jobs will tend to pay less, other things equal, than jobs with less attractive fringe benefit packages or less pleasant working conditions.