NORTHWESTERN UNIVERSITY Essays in Labor Economics A DISSERTATION SUBMITTED TO THE GRADUATE SCHOOL IN PARTIAL FULFILLMENT OF THE REQUIREMENTS for the degree DOCTOR OF PHILOSOPHY Field of Economics By Basit Zafar EVANSTON, ILLINOIS June 2008 UMI Number: 3303622 3303622 2008 Copyright 2008 by Zafar, Basit UMI Microform Copyright All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. ProQuest Information and Learning Company 300 North Zeeb Road P.O. Box 1346 Ann Arbor, MI 48106-1346 All rights reserved. by ProQuest Information and Learning Company. 2 c  Copyright by Basit Zafar 2008 All Rights Reserved 3 Table of Contents List of Tables 6 List of Figures 9 ABSTRACT 10 Acknowledgements 12 Chapter 1. Introduction 14 Chapter 2. College Major Choice and the Gender Gap 19 2.1. Introduction 19 2.2. Choice Model 26 2.3. Data 28 2.4. Econometric Model 47 2.5. Single Major Choice Mo del 50 2.6. Double Major Choice Model 70 2.7. Understanding Gender Di¤erences 78 2.8. Conclusion 85 Chapter 3. Social Conformity: Theory and Experimental Investigation 89 3.1. Introduction 89 3.2. Literature Review 92 4 3.3. Model of Charity Contribution 96 3.4. Experiment 105 3.5. Empirical Analysis 111 3.6. Conclusion 126 Chapter 4. College Major Choice: Revisions to Expectations, Perceptions of Discrimination, and Experimentation 129 4.1. Introduction 129 4.2. Data 133 4.3. Beliefs of Discrimination 140 4.4. Updating Beliefs 150 4.5. Experimentation with majors 161 4.6. Conclusion 162 References 166 Appendix A. Appendix 1 for Chapter 2 177 A.1. Survey Questions 177 A.2. Debrie…ng 181 A.3. Figures and Tables 187 Appendix B. Appendix 2 for Chapter 2 203 B.1. Tables for Choice Model Estimation 203 Appendix C. Appendix for Chapter 3 220 C.1. Experimental Instructions 220 5 C.2. Marlowe-Crowne 2(10) Social Desirability Scale 224 C.3. Debrie…ng 225 C.4. Mathematical Appendix 227 C.5. Figures and Tables 234 Appendix D. Appendix for Chapter 4 241 D.1. Selective Comments 241 D.2. Figures and Tables 243 6 List of Tables A.1 List of Majors 190 A.2 Sample Characteristics 191 A.3 Distribution of WCAS Majors 192 A.4 Percent Chance of graduating with a GPA of at least 3.5 if majoring in: 193 A.5 Percent Chance of reconciling work and family at the jobs if majoring in: 194 A.6 Statistics on Average Annual Starting Salaries of 2006 Graduates 195 A.7 Explaining the errors in students’salary expectations 196 A.8 Expected Annual Salary at the Age of 30 198 A.9 Percentage Chance of being active in the full-time labor force 199 A.10 Best Linear Predictor of Expectations of being active in the labor force 200 A.11 Correlation Patterns between respondent’s and parents’majors (Frequency in cell) 202 B.1 Single Major Choice- Estimation of Homogeneous Preferences 204 B.2 Decomposition Analysis 205 7 B.3 Thought Experiments 206 B.4 Estimation of heterogeneous preferences using Stated Preference 207 B.5 Decomposition Analysis 209 B.6 Best Linear Predictor of Expectation of Parent’s Approval 210 B.7 Mixed Logit Model Estimation 212 B.8 Decomposition Analysis for double major respondents using stated preference data 213 B.9 Distribution of Double Majors 214 B.10 Double Major Choice Model - Estimation Using Choice Data 215 B.11 Contributions of various outcomes 216 B.12 Double Major Choice Model with Error Components 217 B.13 Decomposition Analysis to explain gender di¤erences 218 B.14 Simulations of the Gender Gap under di¤erent Environments 219 C.1 Donation Statistics 235 C.2 Wilcoxon Rank Sum Test 236 C.3 Contribution response to group choice in Round 2 236 C.4 Contribution response to group choice in Round 3 237 C.5 Contribution response to group choice in Rd. 3 238 C.6 Contributions and the Group Choice 238 C.7 Explaining the Change in contributions in Rounds 4-6 239 8 C.8 Responding to friends and strangers 240 D.1 Sample Characteristics 246 D.2 Statistics on Average Annual Starting Salaries of Northwestern 2007 Graduates 247 D.3 Explaining the errors in students’salary expectations 248 D.4 Summary Stats about labor force participation, fertility beliefs and time use 250 D.5 Best Linear Predictor of Expectations of being active in the full-time labor force at 30 251 D.6 Best Linear Predictor of Expectations of being active in the full-time labor force at 40 252 D.7 Perceptions of Monetary and Non-Monetary Discrimination 253 D.8 Reasons for gender di¤erences in income within majors 254 D.9 Correlation patterns between various beliefs 255 D.10 Single Major Choice- Estimation of Preferences 256 D.11 Decomposition Analysis 257 D.12 Stated reasons for cho osing a major 258 D.13 The change in beliefs over time 259 D.14 The nature of evolution of beliefs over time 260 D.15 Patterns in experimentation with majors 261 D.16 Summary Statistics for experimentation with majors 262 9 List of Figures A.1 Gender Composition of Undergrad Majors of 1999-2000 Bachelor’s Degree Recipients Employed Full-Time in 2001. 187 A.2 Average income of 1999-2000 Bachelor’s Degree Recipients Employed Full-Time in 2001 by Undergraduate Major. 188 A.3 Timeline 189 C.1 Cumulative Density of Contributions 234 D.1 Timeline of the surveys 244 D.2 Change in the GPA beliefs in response to change in GPA realized between the surveys. 244 D.3 Change in GPA beliefs in response to new information revealed between the two surveys. 245 [...]... gap in majors that I consider can be explained by gender di¤erences in beliefs about tastes for studying di¤erent …elds, and preferences For example, 60% of the gender gap in engineering is due to di¤erences in preferences, 26 while 30% is due to di¤erences in how much females and males believe they will enjoy studying engineering Gender di¤erences in beliefs about future earnings in engineering are insigni…cant... sub-group in my sample for whom pecuniary outcomes explain more than 50% of the choice Finally, this paper is related to the literature that focuses on the underlying reasons for the gender gap in science and engineering An interesting question is whether gender di¤erences in choices are driven by di¤erences in preferences or in beliefs In the recent debate on the under-representation of women in science... of being active in the full-time labor force at the age of 30 and 40, and E(Y0 ), the expected income of dropping out from school at the age of 30 9 This question elicits an ordinal ranking of the social status of the jobs However, I treat these ordinal responses as cardinal in the choice model analysis In hindsight, this question should have been asked in terms of subjective expectations of getting... WCAS and the School of Engineering, or not Conditional on the student’ majors being in WCAS and the School of Engineering, the choice set is the s same as that of a single major respondent except that the goal is now to select pairs of majors rather than a single one Conditional on one of the majors being in a school other than WCAS or the School of Engineering, the choice set includes all major categories... outcomes in college but di¤er in their preferences for outcomes in the workplace, and (3) the gender gap in major choice is mainly because of gender di¤erences in beliefs about enjoying studying di¤erent majors, and gender di¤erences in preferences Chapter 3, motivated by the fact that there is a positive correlation between one’ own s major and that of their parents and elder siblings, outlines a model in. .. advisors, teaching large core classes, and Deans of some schools (other than WCAS) economics professors 32 Fine Arts The proportion of females who (intend to) major in Literature and Fine Arts is more than 3 times the corresponding proportion of males The 45-minute survey consisted of three parts The …rst part collected demographic and background information (including parents’ and siblings’ occupations... talented individuals For example, the Study of Mathematically Precocious Youth shows that mathematically talented women preferred careers in law, medicine, and biology over careers in physical sciences and engineering (Lubinski and Benbow, 1992) Moreover, the gender gap in mathematics achievement and aptitude is small and declining (Xie and Shauman, 2003; Goldin et al., 2006), and gender di¤erences in mathematical... student pursuing a single major in WCAS, it is assumed that her choice set includes all the categories that span WCAS majors (a-g), and category k, the majors o¤ered in the School of Engineering.5 Therefore, any student with a single major is assumed to have 8 categories in her choice set For an individual with a double major, the choice set is conditional on whether both her majors are in WCAS and... (1997) …nd that di¤erences in major account for a substantial part of the gender gap in the earnings of individuals with several years of college education Moreover, Xie and Shauman (2003) show that, controlling for major, the gap between men and women in their likelihood of pursuing graduate degrees and careers in 20 science and engineering is smaller The gender di¤erences in choice of major have recently... the theoretical model outlined in Altonji (1993), which treats education as a sequential choice made under 21 uncertainty In his dynamic model, the decision about attending college, …eld to major in, and dropping out are based on uncertain economic returns, personal tastes, and abilities I, however, do not model the choice of college The particular institutional setup in the Weinberg College of Arts & . problems in measuring social interactions in real world settings. I …nd that both learning about the norm and social in uence play an important role in the choices of the subjects. Individuals indulge. for outcomes in college but di¤er in their preferences for outcomes in the workplace, and (3) the gender gap in major choice is mainly because of gender di¤erences in beliefs about enjoying studying di¤erent. active in the full-time labor force at 30 251 D.6 Best Linear Predictor of Expectations of being active in the full-time labor force at 40 252 D.7 Perceptions of Monetary and Non-Monetary Discrimination