The Effect of Labor Market Information on Community College Students’ Major Choice

The Effect of Labor Market Information on Community College Students’ Major Choice

By
Rachel Baker, Eric Bettinger, Brian Jacob, Ioana Marinescu
Economics of Education Review. August
2018, Vol. 65, Pages 18-30

An important goal of community colleges is to prepare students for the labor market. But are students aware of the labor market outcomes in different majors? And how much do students weigh labor market outcomes when choosing a major? In this study we find that less than 15% of a sample of community college students in California rank broad categories of majors accurately in terms of labor market outcomes. Students believe that salaries are 13% higher than they actually are, on average, and students underestimate the probability of being employed by almost 25%. We find that the main determinants of major choice are beliefs about course enjoyment and grades, but expected labor market outcomes also matter. Experimental estimates of the impact of expected labor market outcomes are larger than OLS estimates and show that a 10% increase in salary is associated with a 14 to 18% increase in the probability of choosing a specific category of majors.