Abstract
I propose a model of postsecondary education in which major field of study can be used by individuals to signal productivity to employers. Under this signaling model, I show that geographic areas with high access to elite universities result in fewer science, technology, engineering, and mathematics (STEM) majors among lower ability students at nonelite colleges. This is distinct from the prediction of a full information model in which access to elite schools should only affect high ability individuals directly. Using data from the National Center for Education Statistics' Baccalaureate & Beyond survey, I find evidence that is consistent with the signaling model prediction, specifically a 2.3–3.7 percentage point or 16%–25% decrease in the probability of choosing a STEM major among lower ability students in areas with greater access to elite colleges. (JEL I21, J24)
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