College Quality and Returns to Occupational Match
Abstract: How does college quality matter? Existing literature emphasizes student and institutional characteristics, but has paid little attention to the transition into the labor market. This paper introduces a new perspective to understand college quality through how it affects the relatedness between job and college education. Using panel survey data and a novel knowledge-based measure of relatedness, I find that students from the lowest-quality colleges work in less related occupations and see no wage gains from the relatedness on average. An exception is science majors at these colleges, who experience substantial returns of 14%, though such majors are relatively rare. In contrast, students attending middle- and high-quality colleges earn 4%-5% more in more related jobs. Further analysis indicates that in addition to major courses, non-major courses in similar fields also contribute to the wage gains, especially at top-tier colleges. These findings suggest that college quality shapes the wage returns to job-education relatedness, potentially through differences in course composition.
Trade-offs Between College and Major Preferences