Economics 419: Discussion Questions on Student Major and Wage Analysis

This assignment analyzes the paper by Long, Goldhaber, and Huntington-Klein on the economics of education. It explores student choices of college majors and their responsiveness to wage trends in the labor market. The assignment addresses the researchers' methods for assigning wages to majors, the distinction between local and national wage trends, and the main results of the study. It also investigates the tightness of the major/occupation link, how students gather information about wages, and how the results inform the human capital model. The assignment emphasizes the importance of highlighting labor market trends to students and the role of career guidance in educating students on major choices. The student's response highlights the relationship between major choices and wage, the influence of labor market demand on student choices, and the need for policy interventions to align student choices with labor market demands. The student also addresses the source of information used by students to decide on their majors.

Discussion Questions for Long, Goldhaber, & Huntington-Klein
1) There’s a lot going on in this paper. What does it seem like are the main goals of
what it’s trying to find out? [Hint: there’s something in the area of understanding student
choice and also something about labor market alignment]
The paper focuses on the students’ choices of courses which do not focus on the economic
consequences at hand. They are advised to pursue majors which are on high demand in the labor
market. Great recession on the labor market has brought about the discussion on the majors that
students choose.
The paper also talks of policy interventions which were to be put in place to revert the shortfall
in the labor market. The students could have been encouraged to pursue ‘right’ majors. Colleges
would achieve this by differential tuition policies (changing the relative price of different
majors), changing targeted loans and/or loan forgiveness. Another proposal was to subsidize the
fee paid in order to encourage more enrollments. Colleges on the other hand could expand
departments offering courses related to high demand fields.
2) What do the researchers do to assign “a wage” to a given major? Does this process
seem reasonable? Why do they make a distinction between local and national wage trends?
How well does the process and the local/national distinction relate to how you expect
students might put together their beliefs about wages?
The number of years a major take was a factor in obtaining the wage. Quoting from the paper,
“Bachelor’s degrees produced in year t in detailed majors are most strongly associated with
wages in year t–3, which suggests that college majors respond most to wages when students are
(roughly) college freshmen.” Researchers looked into the connection between the major and
occupational choices. Wages respond to majors that have a tight connection to relatively few
occupational choices. Lastly, the researchers check whether there is heterogeneity in response
by student characteristics.
The process used in assigning wages is reasonable. When the labor market for a major was high,
we expected the wages to be high too. This is brought about by large demand for labor and low
supply. The wage trends vary from local to national. The distinction is brought by difference in
the skills gained. In most instances, majors obtained in national are regarded to be weightier
than that from local. Students needed to understand that wage is given with a proportion to
amount of work done.
3. What are the main results of this paper? If you were in charge of designing policy
about college, would this information make you want to intervene and change how students
choose their major? If so, how would you want it to change and how might you go about
doing it?
From the data presented, students are more responsive to wages in majors that have tighter
connections to particular occupations. Quoting the paper “The peak correlation between wages
and majors is 0.345 for majors in the top-quartile, 0.238 for majors in the 2nd quartile, and only
0.096 (p > 0.10) for majors in the bottom-half of the distribution (i.e., those majors with the
loosest connections to particular occupations). Students are more responsive to wages in majors
that have tighter connections to particular occupations.”

The results also showed that there was no significant relationship between a major’s size and its
connection to particular occupations. It also showed that males respond substantially more to
changes in major-specific wages than females (Card, 1990).
From the results obtained, it is important to note the importance of highlighting labor market
trends to students picking their majors. They need to explore opportunities where there are
vacancies rather than flooding an already flooded major. Here career guidance from experts
would play a big role. They would be responsible for educating students on majors to consider.
4. What do they find about the “tightness” of the major/occupation link? About the
local/national distinction? How do these results inform how you think students might
gather information about the wage associated with the different majors? Where are
students getting their information?
Tightness of the major ensures that the data recorded do not have loopholes. The information
obtained was sufficient to expound on how students have knowledge on labor market trends and
wage structure. The students obtain their information from textbooks and other printed press as
well as online (Acemoglu, 2019)
5) And as always: how does this result inform our theory of how people choose their
education? Are these results what the human capital model would predict? Are there other
ways we can explain them besides human capital?
The result indicated that most people do not consider labor market when they are choosing their
majors. Human capital predicts that most people will flock mid-level and low majors. Its only
human capital that explain the how it ruins people.
(600 Words)

References
Acemoglu, D. (2002). Technical change, inequality, and the labor market. Journal of economic literature,
40(1), 7-72.
Card, D. (1990). The impact of the Mariel boatlift on the Miami labor market. ILR Review, 43(2),
245-257.