The Role of Education-Industry Match in College Earnings Premia

Abstract Many states incentivize college students to major in fields aligned with specific, often “in-demand” industries. While their goal is often to raise students' labor market outcomes, little is known about whether matching one's degree with an industry of work improves employment and earnings. We leverage a novel education-industry crosswalk applied to student and worker panel data covering over 295,000 graduates to estimate an education-industry match premium that leverages withinperson variation in earnings. We document which fields have the most and least education-industry matching, how match premia vary across fields, and how match premia evolve over time. We show that workers in industries “matched” with their college degree field experience an average earnings premium of about 5-10%, though these premia vary by gender, field, level of degree, and how long a worker has been working in a matched industry. These findings shed new light on how education, occupation, and industry explain wages and offer important insights for future work and individual investments in higher education.