Whether the Great Recession Affects Students’ Degree Field Choices?

Abstract

To answer the question of whether the Great Recession moved students towards more stable majors in a systematic manner, I look at how the percentage of degrees awarded in recession-resistant and recession-sensitive degree fields changed in the post-recession period in the treatment states using both the differences-in-differences and synthetic controls methods. The differences-in-differences method shows that the percentage of degrees awarded in recession-resistant majors increased by 1.5 percentage points in the post-recession period in treatment states from a baseline of 45% and the percentage of degrees awarded in recession-sensitive majors decreased by 1.4 percentage points from a baseline of 55% (both statistically significant at the 1% level). The results remain similar when I use a continuous treatment variable, the changes in the state-level unemployment rates, instead of the binary measure (treatment and control states). Synthetic controls method also shows that the percentage of degrees awarded in recessionresistant majors increased and the percentage of degrees awarded in recession-sensitive majors decreased. These results suggest that the Great Recession led students to substitute away from degree fields which were unstable during the recession and towards degree fields which were relatively stable during the recession. Looking at the enrollment trends, I find suggestive evidence that these effects are partially driven by changes in the distribution of students across different types of institutions in the post-recession period in the treatment states. My results are in line with Blom, Cadena, and Keys (2015) who analyze how the economic conditions impact the distribution of majors by considering the variations across business cycles in the US between 1960 and 2011. They also find that students substitute away from the recession-sensitive fields towards recession-proof fields.