Self-Selection, University Courses and Returns to Advanced Degrees

TL;DR

This study analyzes how different combinations of bachelor's and master's degrees in Italy influence labor market returns, emphasizing curriculum features like quantitative courses and discipline differences, using causal inference and policy simulations.

Contribution

It provides new evidence on the returns to combined degree choices and curriculum characteristics, incorporating master's degrees into the analysis of higher education outcomes.

Findings

Degree combinations vary significantly in returns.

Interdisciplinary degree combinations yield higher economic returns.

Curricula with more non-quantitative courses in bachelor's degrees are associated with better outcomes.

Abstract

Higher education often requires choosing a bachelor's and a master's degree, yet the returns of these combined choices and the role of courses in different disciplines remain understudied. This paper addresses this gap using detailed data on Italian graduates and university programs. I study the labor market returns to combinations of bachelor's and master's degrees and investigate how curriculum characteristics affect outcomes. I exploit exogenous variation in access to bachelor's and master's degrees to causally estimate the returns to 43 combinations of degrees. I organize the data in a nested model with exogenous variation in admission requirements and explore the preference profile of the sample through policy simulations that shift these requirements. I then relate the estimated returns to the academic curriculum of degrees, focusing on the role of quantitative education and timing of courses. I contribute to the literature on returns to advanced degrees by incorporating master's degrees in the discussion on how higher education affects outcomes and providing evidence on the characteristics of curricula that are positively related to labor market returns. The findings reveal substantial variation in returns to degree combinations, even among combinations with the same bachelor's degree, indicating the need to consider both types of programs. Combinations of degrees in different disciplines positively impact economic outcomes, while those in the same field perform worse. Successful combinations feature more non-quantitative education in the bachelor's, and quantitative courses alone do not explain higher returns.