Cohort size effects on earnings: Differences by college major

Abstract

The effects of cohort size on the starting salaries of college graduates from different areas of study are examined. Increases in the size of graduating classes relative to the population depress their starting salaries relative to other workers. The smallest negative cohort size effects are found for engineering and business graduates, while the largest are estimated for science and liberal arts graduates. Science and liberal arts graduates are more complementary with other workers or increase their human capital investments more than business and engineering graduates do in response to increases in cohort size. Either of these differences generate larger negative cohort size effects on relative earnings.