Why do women go to college and choose poor paying careers?

The convergence of college majors, between men and women, is most notable during the 1970s and ended in the mid 1980s. Changes in divorce law were among the driving forces for the changes in women’s behavior. Interesting:

Why do women today invest in a college education at much higher rates than men, whereas fifty years ago men graduated more frequently? And given their high college attendance rates today, why do women continue to select disproportionately into lower-paying majors? The main objective of this paper is to answer these two questions.
Historically, men made up the majority of college students, and earned more than 90% of all high-paying degrees in science and business. In the 1970s and early 1980s, men and women converged substantially both in college graduation rates as well as in their choices of college major, with more women choosing science and business degrees. It has been well-documented that women reversed the “gender gap” in graduation rates by the mid-1980s and now constitute the majority of college students, although the reason why this happened is still an open question.1 What has been less well-documented is that convergence between men and women in choice of major mostly ceased after the mid-1980s. In 1985, nearly 80% of education degrees and about 85% of degrees in health support fields, but less than 30% of hard science and engineering degrees were awarded to women. The same is true today.2
The question of why women graduate at much higher rates than men, but with very differ- ent majors, has implications for a range of individual outcomes, as well as for macroeconomic outcomes like supply of skill to the labor market. As women outpace men in college attendance, their low participation in majors like science and engineering contributes to potentially low supply of science-related skills in the U.S. More generally, the observed patterns, like women’s higher graduation rates despite lower lifetime labor supply, run counter to the predictions of a standard human capital investment model (Becker (1962), Ben-Porath (1967), Mincer and Polachek (1974)), and raise questions about the determinants of returns to different educational choices for men and women.

In this paper, I explain the dynamics of men’s and women’s educational investments from 1960 to 2010. The paper makes three main contributions. The first contribution is to document reduced-form evidence about the factors that potentially explain the above-mentioned gender gaps over time. I do this in three steps. In the first step, I show that changes in the wage premium over time and differences in major-specific premiums across men and women cannot readily account for the observed gender differences in college attendance or decisions about majors.
In the second step, I provide evidence that changes in the marriage market starting in the 1970s changed the relative returns to a college education for men and women. I use quasi- experimental variation in the timing of unilateral, no-fault divorce law reforms across states
to document that the reforms increased women’s college graduation rates relative to men, and made them more likely to select high-paying majors in business and science-related fields. There is a simple intuition for this finding. Women with high school education or less draw from a substantially lower wage distribution than men, and are also more likely to have custody of and financial responsibility for children. A college degree allows women access to higher paid jobs, providing insurance against very low income realizations for women outside a two-earner household.
In the final step, I present evidence that majors are characterized not only by different wage premiums, but are also by different levels of “work-family flexibility.” By flexibility I mean that some majors are associated with occupations that provide easier access to part-time or part- year work and have lower wage penalties in case of a temporary absence from the workforce or a reduction of weekly hours worked. I show that college women reduce their labor supply substantially during their childbearing years, and that these patterns differ across majors and occupations. The data patterns I document indicate that women are more likely than men both to take advantage of flexibility associated with some majors, as well as to choose more flexible majors.
The documented empirical patterns indicate that insurance and flexibility are important drivers of the gender gaps, but it is difficult to quantify the impact of these factors on the gender gaps using the reduced-form analysis alone. The main reason for this is that other variables, like returns to skill, also changed over this time period, and will also affect decisions about education, labor supply, marriage, and divorce.
To address this, as a second main contribution, I develop and estimate a dynamic structural lifetime model of individual decisions about education, marriage, and labor supply. The model is constructed based on the documented data patterns. It follows individuals starting at age 18 over three phases of life: education, work, and retirement.
In the first phase, individuals decide whether or not to go to college. If they go to college, they choose between two majors. The first major is associated with occupations that have a high return, but also a high rate of skill depreciation, meaning that individuals incur large wage penalties for any reductions in labor supply. The second major is associated with occupations that have a lower return, but also a lower rate of skill depreciation. These differences between the majors match those observed in the data. Individuals make decisions based on their expected lifetime utility from each educational choice and their unobserved effort cost of completing each ma jor.

In the second, working phase of life individuals make decisions about time allocated to market and home production, marriage and divorce, and savings. If an individual is single, each period he or she is matched with a potential partner and decides whether to marry. If married, the
partners make household decisions jointly, but there is no commitment, meaning that if in some period the partners are not both better off in the marriage than they would be if they were single, they divorce (Marcet and Marimon (1992)). There are shocks to marital match quality, as well as to wages and to fertility. After a fertility shock, the presence of a young child in the household increases the productivity of hours dedicated to child care and home production. The final, retirement stage of life, is a simplified version of the working life stage, in which individuals make decisions only about consumption, home production, and savings. For different cohorts, decisions over the lifetime and therefore expected returns to education are affected by changes in the wage structure and by changes in the marriage market after the reform in divorce laws.