How students change their majors during a recession

Researchers warn of long-term impact on the labor force

During recessions, college students tend to abandon certain majors and flock to others with better job prospects, according to a new study from the Institute for the Study of Labor (IZA).

Researchers found that every 1% rise in national unemployment may result in a 3.2 percentage point change in men's and a 4.1 percentage point change in women's major choices. While some students may see their earnings damaged by recessions, up to 10% of that effect may be offset by students who switch to higher-paying majors, says co-author Benjamin Keys of the University of Chicago.

The scholars analyzed data on Americans who turned 20 between 1960 and 2011, collected through the American Community Survey and the Baccalaureate and Beyond Survey.

Recession led to an enrollment boom, but not a graduation boom

They found that drops in employment resulted in students switching into majors that are "more challenging, require more math, and, above all, are higher-paying," according to the study.

The researchers found that for every percentage point increase in unemployment, at least 2% of women change their field of study. When the economy is down, women are slightly more likely to major in non-finance business, nursing, and accounting. On the other hand, they tend to move away from fields in education, literature and language, sociology, psychology, and liberal arts and history (in that order).

For men, each percentage point rise in unemployment leads to an increase in male students opting for engineering, accounting, and natural science. In turn, men transfer away from education, liberal arts and history, literature and language, psychology, and sociology, in that order.

"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," write the study authors (Jaschik, Inside Higher Ed, 7/27; Zumbrun, "Real Time Economics," Wall Street Journal, 7/17).

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