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 40% of a sample of community college students in California rank broad categories of majors accurately in terms of labor market outcomes. However, students believe that salaries are 13 percent higher than they actually are, on average, and students underestimate the probability of being employed by almost 25 percent. 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 1% increase in salary is associated with a 1.4 to 1.8% increase in the probability of choosing a specific category of majors.
This work would not have been possible without the assistance and collaboration of the institutional researchers at the two community colleges with whom we partnered. We are grateful for their insights and assistance. This work benefitted greatly from the thoughtful feedback of the seminar participants at California State University, Fullerton, NBER Labor Studies Program Meeting, the ASSA meetings, and the IZA Workshop on the Economics of Education. Rachel Baker received support from the Stanford Predoctoral Training Program in Quantitative Education Policy Research, funded by the Institute of Education Sciences (IES Award R305B090016). The opinions expressed here do not represent those of the funding agency. All errors are our responsibility. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.