van Ophem, J.C.M. and Mazza, J. (2024). Educational choice, initial wage and wage growth Empirical Economics, :1--40.

We study the effects of expected initial wages, expected wage growth, and observedand unobserved heterogeneity in the choice of college major in a sample of Americancollege graduates. We propose a three-stage empirical model that relates future earningsto individual choices. In the first stage, starting from revealed choices, observedwages, and life-cycle wage profiles, we estimate the expectation on initial wages andwage growth from the individual point of view, where the panel structure of the dataallows us to produce estimates corrected for self-selection bias. We find substantialdifferences in expected real wages and expected real wage growth between majors andthat both characteristics of life cycle earnings influence major choice. Our parametricmodels show a strong correlation between salary trends and major choice, whereassemiparametric models yield less reliable results. We interpret our results as beingconsistent with agents being rational and as a validation for our estimation strategybased on counterfactual imputation.