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How Does the Price of College Affect Major Choice?

Author

Listed:
  • Emily E. Cook

    (Texas A&M University)

  • Ruipu Gao

    (Tulane University)

Abstract

We illustrate two ways in which the price paid for college tuition ("net tuition") may affect students' major choice: 1) a selection effect in which increased net tuition discourages attendance among students with high non-pecuniary returns to low-wage majors, and 2) a "switching" effect in which all students are more likely to choose a high-wage major when net tuition is high, because the marginal utility of consumption increases with net tuition. Using fixed-effects regressions on data from public colleges from 2000-2019 and an IV strategy based on state-level appropriations budgets, we estimate a \$1,723 increase in the annual wage associated with college graduates' degree fields per a \$1,000 increase in net tuition.

Suggested Citation

  • Emily E. Cook & Ruipu Gao, 2024. "How Does the Price of College Affect Major Choice?," Working Papers 2411, Tulane University, Department of Economics.
    • Handle: RePEc:tul:wpaper:2411
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    File URL: http://repec.tulane.edu/RePEc/pdf/tul2411.pdf
    File Function: First Version, October 2024
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    More about this item

    Keywords

    major choice; net tuition; human capital;
    All these keywords.

    JEL classification:

    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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