College major choice and ability: Why is general ability not enough?

Abstract

In this paper we study the impact of cognitive ability on college major choices using an administrative data set for full-time students enrolled in four-year business and economics programs offered by the largest Slovenian university. In contrast to existing studies, we are able to distinguish between general ability, measured with high school GPA, and major-specific ability, measured with grades achieved in major-specific courses. We show that students with higher general ability are more likely to enroll in Economics majors, while higher major specific ability (e.g. higher grade in Accounting) increases the likelihood of choosing that major (Accounting). We also find that both genders are more responsive to measured major-specific ability in majors that are traditionally more popular among them (e.g. Business Informatics for males). These results suggest that policy makers aiming to change the structure of the labor supply should attempt to change the major-specific abilities of students.