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ECONOMICS COURSEWORK AND LONG-TERM BEHAVIOR AND EXPERIENCES OF COLLEGE GRADUATES IN LABOR MARKETS AND PERSONAL FINANCE

Authors

  • SAM ALLGOOD,

    1. Allgood: Associate Professor, Department of Economics, University of Nebraska-Lincoln, Lincoln, NE 68588. Phone 402-472-3367, Fax 402-472-9700, E-mail sallgood@UNLnotes.UNL.edu
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  • WILLIAM BOSSHARDT,

    1. Bosshardt: Associate Professor, Department of Economics, Florida Atlantic University, Boca Raton, FL 33431. Phone 561-297-2908, Fax 561-297-2542, E-mail wbosshar@FAU.edu
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  • WILBERT VAN DER KLAAUW,

    1. van der Klaauw: Assistant Vice President, Microeconomic and Regional Studies Function, Federal Reserve Bank of New York, 33 Liberty Street, New York, NY 10045. Phone 212-720-5916, Fax 212-720-1844, E-mail Wilbert.Vanderklaauw@ny.frb.org
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  • MICHAEL WATTS

    1. Watts: Professor of Economics, Department of Economics, Purdue University, West Lafayette, IN 47907. Phone 765-494-8543, Fax 765-496-6068, E-mail mwatts@purdue.edu
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    • We thank the Board of the Calvin K. Kazanjian Economics Foundation for the grant that made this work possible, and the AEA Committee for Economic Education for bringing us together to write the proposal, as described by Salemi et al. (2001). April Fidler provided major assistance in project coordination, administration, and data entry. Georg Schaur worked extensively with data organization and preliminary tabulations. We have benefited from helpful comments from two anonymous referees and from participants at the 2006 SEA and 2009 SEE meetings and seminar participants at Waseda University. The views expressed are those of the authors and do not necessarily reflect those of the Federal Reserve Bank of New York.


Abstract

Using survey data from over 2,000 students who attended one of four large public universities in 1976, 1986, or 1996, we investigate the relationship between taking more coursework in economics, or choosing economics as an undergraduate major, and a wide range of later decisions and outcomes in labor markets and personal finance, many of which have not been analyzed in earlier research. Generally, economics coursework and majoring in economics are significantly related to higher levels of earnings, home equity, and savings. They are also associated with working more hours and negatively related to completing graduate degrees (except the MBA). Among graduates with positive savings, those with more economics coursework invest more in individual stocks and money market accounts, and are more likely to have employer-provided life insurance. They have fewer credit cards, which are more often paid in full each month. Most of these findings also hold for graduates who majored in business, but on average economics majors worked more hours and earned more than business majors, were more likely to have been self-employed, and expected to retire at an older age. Business majors were more likely to have experienced a layoff, and were even less likely than economics majors to complete graduate degrees (except the MBA). Economics majors expected to save even more than business majors by retirement, and viewed short-term and precautionary motives for saving as more important. Finally, our results suggest that exposure to economics through course-taking is more important for later outcomes than actual performance in those courses. (JEL A22, J3, D12)

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