Abstract
We study how students' field of study shapes the labor market consequences of trade shocks. We develop a dynamic general equilibrium framework that incorporates both a labor market where workers differ in their field of study, and an education margin where students choose their fields in anticipation of future demand. Leveraging uniquely rich Danish administrative data, and features of the Danish university application system, we develop a methodology to jointly estimate students' field preferences and key labor market parameters, while allowing for latent heterogeneity in workers' skills and student preferences. We find that heterogeneity in how responsive students are to shocks, with some students being substantially more responsive than previous estimates. However, we also find that students cluster into several preference types over fields of study---e.g., STEM---so that they are only elastic across a subset of fields. In ongoing work, we close the model and consider the general equilibrium consequences of globalization, as well as the effects of various labor market and education policies.
Local Organizer: Filippo Santi e Alessandro Sforza