The Analysis of Field Choice in College and Graduate School: Determinants and Wage Effects

As the workforce has become more educated, educational decisions are no longer just about whether to acquire more, but rather what type of education to pursue. In college, individuals somewhat specialize through their choice of college major. Further specialization occurs in graduate school. This chapter investigates how majors and graduate school affect labor market outcomes as well as how the individuals make these potentially important decisions. To do so, we develop a dynamic model of educational decision-making. In light of the model, we examine the estimation issues associated with obtaining causal effects of educational choices on earnings. We then examine ways that authors have overcome the selection problem as well as the approaches authors have taken to estimate the process by which these educational decisions are made.