The Returns to College Major Choice: Average and Distributional Effects, Career Trajectories, and Earnings Variability

A growing literature examining labor market returns to college major is motivated by large returns to skill. Prior research focuses on mean effects rather than earnings growth and variability. Using administrative data from Texas, we find that mean differences mask important features of the returns to college majors. First, earnings growth varies across fields. Second, there is considerable effect heterogeneity across workers. Third, major choice affects earnings variability within workers over time. We use our results to simulate a lifecyle utility model and compare mid-career utility and mean earnings returns across fields while highlighting the important role of risk preferences.