Industry Fluctuations and College Major Choices: Evidence from an Energy Boom and Bust

Luyi Han, John V. Winters. 2020
Economics of Education Review 77: 1-18

Energy booms of the 1970s and 1980s, as measured by price surges, lead to increases in college petroleum engineering and geology majors, especially in the states with large energy sectors. The opposite happens during energy busts. Results show that student major choices respond to labor market incentives, especially when there are changing local market demands.

Abstract

This paper examines how college students in the United States altered their college majors during the energy boom and bust of the 1970s and 1980s. We focus on petroleum engineering and geology, two majors closely related to the energy industry. We find strong evidence that the energy boom increased the prevalence of these two energy-related majors and the energy bust lowered the prevalence of these majors. Effects are particularly strong for young people born in energy intensive states. Thus, college major decisions responded to industry fluctuations with important location-specific effects consistent with frictions to migration and information flows.