April 2024

Institution, Major, and Firm-Specific Premia: Evidence from Administrative Data

Ben Ost, Weixiang Pan, and Douglas Webber


We examine how a student’s field of degree and institution attended contribute to the labor market outcomes of young graduates. Administrative panel data that combines student transcripts with matched employer-employee records allow us to provide the first decomposition of premia into individual and firm-specific components. We find that both major and institutional premia are more strongly related to the firm-specific component of wages than the individual-specific component of wages. On average, a student’s major is a more important predictor of future wages than the selectivity of the institution attended, but major premia (and their relative ranking) can differ substantially across institutions, suggesting the importance of program-level data for prospective students and their parents.

Keywords: College Major, College Premium, Firm Effect, Higher Education, Returns to Institution, Wage Decomposition

DOI: https://doi.org/10.17016/FEDS.2024.018

PDF: Full Paper

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Last Update: April 09, 2024