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Selective Migration, Occupational Choice, and the Wage Returns to College Majors

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  • Ransom, Tyler

    (University of Oklahoma)

Abstract

I examine the extent to which the returns to college majors are influenced by selective migration and occupational choice across locations in the US. To quantify the role of selection, I develop and estimate an extended Roy model of migration, occupational choice, and earnings where, upon completing their education, individuals choose a location in which to live and an occupation in which to work. In order to estimate this high-dimensional choice model, I make use of machine learning methods that allow for model selection and estimation simultaneously in a non-parametric setting. I find that OLS estimates of the returns to business and STEM majors relative to education majors are biased upward by 15% on average. Using estimates of the model, I characterize the migration behavior of different college majors and find that migration flows are twice as sensitive to occupational concentration as they are towage returns.

Suggested Citation

  • Ransom, Tyler, 2020. "Selective Migration, Occupational Choice, and the Wage Returns to College Majors," IZA Discussion Papers 13370, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp13370
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    References listed on IDEAS

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    1. Koşar, Gizem & Ransom, Tyler & van der Klaauw, Wilbert, 2022. "Understanding migration aversion using elicited counterfactual choice probabilities," Journal of Econometrics, Elsevier, vol. 231(1), pages 123-147.
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    Cited by:

    1. Zhu,Yu & Xu, Lei, 2022. "Returns to Higher Education - Graduate and Discipline Premiums," GLO Discussion Paper Series 1091, Global Labor Organization (GLO).
    2. Hans Ophem & Jacopo Mazza, 2024. "Educational choice, initial wage and wage growth," Empirical Economics, Springer, vol. 67(3), pages 1235-1274, September.
    3. Hemelt, Steven W. & Hershbein, Brad & Martin, Shawn & Stange, Kevin M., 2023. "College majors and skills: Evidence from the universe of online job ads," Labour Economics, Elsevier, vol. 85(C).
    4. Fernando Saltiel, 2019. "What's Math Got to Do With It? Multidimensional Ability and the Gender Gap in STEM," 2019 Meeting Papers 1201, Society for Economic Dynamics.
    5. Arpita Patnaik & Matthew J. Wiswall & Basit Zafar, 2020. "College Majors," NBER Working Papers 27645, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    occupation; migration; college major; Roy model;
    All these keywords.

    JEL classification:

    • I2 - Health, Education, and Welfare - - Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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