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Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data

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Abstract

We examine how a student's field of degree and institution attended contribute to the labor market outcomes of young graduates. Administrative panel data that combines student transcripts with matched employer-employee records allow us to provide the first decomposition of premia into individual and firm-specific components. We find that both major and institutional premia are more strongly related to the firm-specific component of wages than the individual-specific component of wages. On average, a student's major is a more important predictor of future wages than the selectivity of the institution attended, but major premia (and their relative ranking) can differ substantially across institutions, suggesting the importance of program-level data for prospective students and their parents.

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  • Ben Ost & Weixiang Pan & Douglas A. Webber, 2024. "Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data," Finance and Economics Discussion Series 2024-018, Board of Governors of the Federal Reserve System (U.S.).
    • Handle: RePEc:fip:fedgfe:2024-18
    DOI: 10.17016/FEDS.2024.018
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    Cited by:

    1. Haggag, Kareem & Patterson, Richard W. & Pope, Nolan G. & Feudo, Aaron, 2021. "Attribution bias in major decisions: Evidence from the United States Military Academy," Journal of Public Economics, Elsevier, vol. 200(C).

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    More about this item

    Keywords

    College major; Higher education; Wage decomposition; Returns to institution; Firm effect; College premium;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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