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College Major Choice and Neighborhood Effects in a Historically Segregated Society: Evidence from South Africa

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  • Biniam E. Bedasso

    (Collaborative Africa Budget Reform Initiative Centurion, 0062 South Africa)

Abstract

This paper explores factors affecting the choice of investment in specific human capital in the presence of significant inter-group and spatial inequalities. I use four years of admissions application data at an elite university in South Africa in conjunction with quarterly labor force data to trace the link between aptitude-adjusted expected earnings, neighborhood effects, and the choice of college major. The paper relies on the availability of a rich set of academic and geographical information in the admissions database to make causal inference. The results show that expected earnings have a positive impact on major choice independently of high school background when the ex ante distribution of earnings captures the full range of between-major and within-major income differentials. White applicants are more responsive to differentials in expected earnings than black applicants. Neighborhood effects influence college major choice through near-peer role models and relative achievement at the high school level.

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  • Biniam E. Bedasso, 2019. "College Major Choice and Neighborhood Effects in a Historically Segregated Society: Evidence from South Africa," Education Finance and Policy, MIT Press, vol. 14(3), pages 472-491, Summer.
    • Handle: RePEc:tpr:edfpol:v:14:y:2019:i:3:p:472-491
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