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IZA Discussion Paper No. 13370
June 2020
Selective Migration, Occupational Choice, and the Wage Returns to College Majors

published in: Annals of Economics and Statistics, 2021, 142, 45-110

I examine the extent to which the returns to college majors are influenced by selective migration and occupational choice across locations in the US. To quantify the role of selection, I develop and estimate an extended Roy model of migration, occupational choice, and earnings where, upon completing their education, individuals choose a location in which to live and an occupation in which to work. In order to estimate this high-dimensional choice model, I make use of machine learning methods that allow for model selection and estimation simultaneously in a non-parametric setting. I find that OLS estimates of the returns to business and STEM majors relative to education majors are biased upward by 15% on average. Using estimates of the model, I characterize the migration behavior of different college majors and find that migration flows are twice as sensitive to occupational concentration as they are towage returns.

Communications
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
Network Coordination
Christina Gathmann
christina.gathmann@liser.lu

The IZA@LISER Network is a global community of scholars dedicated to excellence in labor economics and related fields, now coordinated at the Luxembourg Institute of Socio-Economic Research (LISER) following its transition from Bonn.

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