Working paper assesses employer perception of college majors and skills

February 1, 2022

What are the skills that employers expect college graduates to bring to the job? A new National Bureau of Economic Research working paper from Ford School professor Kevin Stange and doctoral candidate Shawn Martin, along with two other colleagues, provides a comprehensive look at the skills associated with college majors as perceived by employers and expressed in job ads. Since the choice of field of study during college is one of the most direct ways college-educated individuals acquire skills and signal capabilities to employers, the study of the relationship between majors, skills, and jobs stands to inform policy leaders in higher education and industry.

To produce the study, “College Majors and Skills: Evidence from the Universe of Online Job Ads,” the research team  categorized a database of 153 million individual job postings from 2010-2018, including 15,000 individual skills. They looked at the skills employers were seeking, how the college majors matched those skills, and the resulting differentiation in wages that arose from those perceptions. They note that the database covers only vacancies posted on the internet, so the jobs represent a subset of the employment demand in the entire economy. 

“Employers demand social and organizational skills at similar rates across all majors, but customer service and financial skills appear specialized to relatively few majors. In turn, we find some majors are more typical of overall skill demand than others. For example, average skill demand for business, economics, and general engineering majors accords reasonably closely with the average skill demand across all majors. Nursing, education, and foreign language, on the other hand, are more specific, with jobs ads requesting skills demanded relatively infrequently in other majors. Together these results suggest that employers view majors as meaningfully encompassing different skill bundles,” they report. 

The co-authors are Steven W. Hemelt, of the University of North Carolina and Brad Hershbein from the W.E. Upjohn Institute for Employment Research. Shawn M. Martin is a PhD candidate in economics and public policy and a fellow in the Predoctoral Training Program in Causal Inference at the University of Michigan. 

They conclude. “Majors can generally be conceptualized as bundles of aggregate skills that are fairly portable across areas in ways that occupations are not. However, our analysis leaves open the possibility that a more fine-grained categorization of skills—such as the thousands that are available in job postings—could still matter for explaining wage variation within major and across place.

“We’ve  known that what students major in is very consequential. This study helps us unpack the underlying mechanism,” Stange noted.  

Funding for the research came from the Russell Sage Foundation, the National Science Foundation, and the Institute of Education Sciences in the U.S. Department of Education.

You can read the full article here.

A data appendix is also available.