US recessions harm take-up of liberal arts degrees

Study finds that students choose to major in subjects that are ‘more challenging’ in bad economic times

August 3, 2015
Maths lecture
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Students in the US are increasingly less likely to major in a liberal arts subject or education field at university as unemployment rates rise.

That is the main finding from a new study which suggests that US students choose to major in subjects that are “more challenging, require more math” and lead to jobs with higher salaries.

The paper, published by the Institute for the Study of Labor, found that each time the unemployment rate increases by 1 per cent, the share of men majoring in engineering fields rises by more than 0.6 per cent, while the proportion choosing education or liberal arts falls by almost 0.4 per cent and more than 0.2 per cent respectively.

For women, the proportion studying business rose the most (0.6 per cent) as unemployment increased, with education (down 1 per cent) and literature and language (down 0.3 per cent) seeing the greatest drop.

Overall, a one percentage point increase in the unemployment rate leads to a 3.2 percentage point reallocation of the major choices of men and a 4.1 percentage point reallocation for women, the study claims.

The study was based on findings from two databases - the American Community Survey and the Baccalaureate and Beyond Survey – and examined the relationship between the choices of major of people aged 20 from 1960 to 2011 and the unemployment rates during this period.

“The recession-induced reallocation in college majors shifts the distribution toward fields of study that are more challenging, require more math, and, above all, are higher paying,” say authors Erica Bloom, principal consultant at Edgeworth Ecomonics, Brian Cadena, assistant professor in the department of economics at the University of Colorado Boulder, and Benjamin Keys, assistant professor at Harris School of public policy at the University of Chicago.

“These shifts suggest that a substantial number of college students make an earnings-maximizing response to recession conditions by choosing majors that are more insulated from recessions.”

They add that the data suggests that many college students, and especially female college students, have “sufficient ability to complete more challenging majors, such as STEM fields, yet choose not to do so in periods with stronger labor market prospects”.

The study also found that a three percentage point rise in unemployment at the time of major choice leads to a distribution of majors that earn roughly 1.35 per cent more, on average, in the long-term.

“The results suggest that even brief recessions can have a long-lasting impact on the distribution of human capital in the economy and provide new insight into how labor supply adjusts in subtle ways to temporary disruptions in labor demand,” the authors said.

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