Degrees of Return: Estimating Internal Rates of Return for College Majors Using Quantile Regression

Published Online in:
American Educational Research Journal
March 12, 2024

Liang Zhang, New York University
Xiangmin LiuRutgers University
Yitong HuNew York University

We estimate the internal rates of return (IRRs) for individuals with college degrees in 10 broad majors compared to high school graduates. Our analysis shows significant differences in the age-earnings trajectories and IRRs across college majors. Specifically, Computer Science and Engineering majors have the highest IRRs, exceeding 13%, whereas Humanities & Arts and Education majors have the lowest IRRs, around 5% for male and 8–9% for female college graduates. Furthermore, the quantile regression analyses show that IRR is generally higher at the high end of the earnings distribution. Finally, we observed a slight decrease in IRR during the study period, which is consistent with the flattening and even decline in college wage premiums following the 2008 Great Recession.

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Read the press release: "Research Finds a College Degree Remains a Sound Investment Despite Rising Tuition"

Study citation: Zhang, L., Liu, X., & Hu, Y. (2024). Degrees of return: Estimating internal rates of return for college majors using quantile regression. American Educational Research Journal. Prepublished March 12, 2024.