The Field and the Length of Studies in the French Post-Secondary Education: The Effect of Expected Earnings

Preliminary version This paper examines the determinants of the choice of the field of study and of the education level achieved in the chosen track, by using a frame-work in which students entering higher education are assumed to anticipate their future market earnings. For that purpose, we use French data coming from the Generation surveys collected by the CEREQ (Centre d’Etudes et de Recherches sur les Qualifications, France). Our econometric approach is based on a structural three-equations model, which is identified thanks to some exclusion restrictions. Once graduated from high school, individuals are supposed to sequentially choose their post secondary major field, then their education level (i.e. the length of their studies in the chosen field), and finally they enter the labor market. We account for the potential correlation between the unobserved individual-specific preferences that affect the val-ues of each post secondary field of study, as well as between the unobserved individual-specific factors that affect the choice equation of the educational level and the labor market earnings equation. Simulating for each given field of study a 10 percent increase of the expected earnings results in a significant impact on the allocation between fields. We also get significant effects on the allocation between education levels when simulating a 10 percent increase of the expected post-college earnings, while the same increase at the graduate level has a negligible effect