Policy discussions in the United States on the link between college majors and earnings have under-appreciated the role of cognitive skills. This study uses the Programme for the International Assessment of Adult Competencies, a unique data set that contains information on individual cognitive skills, college majors and earnings to investigate the relationships between them. The authors find that variation in numeracy and literacy skills is significantly associated with earnings for graduates of the same major. Also, there is an interactional effect between majors and cognitive skills to explain earnings. The findings shed light on the importance of considering cognitive skills when assessing the relationship between college majors and labour market outcomes.
All Science Journal Classification (ASJC) codes
- Business and International Management