How Does the Price of College Affect Major Choice?

Emily E. Cook () and Ruipu Gao ()
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Emily E. Cook: Texas A&M University
Ruipu Gao: Tulane University

No 2411, Working Papers from Tulane University, Department of Economics

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.

Keywords: major choice; net tuition; human capital (search for similar items in EconPapers)
JEL-codes: I22 I23 I26 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-upt
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