Essays on College Education, and on Entrepreneurship
Open Access DepositedThis dissertation consists of three stand alone papers related to collegeeducation and entrepreneurship. The abstracts follow. 1: The Effect of Parental Resources on College Major Choice How do parental resources affect the choice of college major? Using restricted tax and survey data, I provide novel descriptive evidence on the relationship between parental income and major-choice. I then use the plausibly exogenous variation in parental income loss due to the 2008 Great Recession along with variation in cohort year-of-birth to estimate the causal effect of parental resource loss on major choice. I find that the loss of parental resources shifts children away from Liberal Arts majors and into higher paying STEM (Science, Technology, Engineering, and Math) majors. Children of income-losers choose majors with higher lifetime earnings that exceed the increase in student loans resulting from parental income loss. My results are consistent with a model of major choice in which college students trade off college consumption with future pecuniary returns, with the loss of parental resources increasing the attractiveness of high-return majors. 2: The Role of Learning in Returns to College Major Why do some college majors have much higher returns? I ask if differences in returns are due to differences in effort requirements across majors. I use a novel dataset where college students rate courses for academic difficulty, and show that academic standards are highly heterogeneous by major. In Molecular Biosciences 84% of professors are rated as average difficulty or higher, while just 36% are in Sociology. Major difficulty explains the majority vi of variation in survey measured study hours, suggesting grade inflation has negative effects on student effort. I interpret the positive correlation between major difficulty and study hours as consistent with difficulty proxying for learning. I show that major difficulty predicts earnings in the American Community survey. Using an event study approach in the NLSY97 and university-major fixed effects with the College Scorecard, I give evidence of causality. I estimate that one-third of the variation in major premiums can be explained by differences in major difficulty. My results suggest there may be large differences in educational investment across college majors which are driving differences in returns. 3: A Survey of the Literature on Nonemployers Despite being the most common business form in the U.S., nonemployers remain poorly understood. I survey the literature on these businesses that operate without employees. I highlight how research on nonemployers could be crucial in shedding light on the nascent stages of entrepreneurship. I also discuss how future research of nonemployers can shed light on the declining business dynamism observed among employer firms.
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