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

Biniam E. Bedasso ()
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Biniam E. Bedasso: Collaborative Africa Budget Reform Initiative Centurion, 0062 South Africa

Education Finance and Policy, 2019, vol. 14, issue 3, 472-491

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.

Date: 2019
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