This brief is based on a paper that examines the determinants of college major choice in South Africa in the context of significant inter-group and spatial inequalities. In what follows, I will present a summary of empirical results inspired by the following questions: 1) How do various groups respond to differentials in major-specific expected earnings against the backdrop of sizeable inequality in economic and socio-political endowments? 2) How does spatial inequality influence college major choice at the levels of specific neighborhoods and high schools? I will then attempt to draw a few policy implications from the empirical results. The analysis is based on the extensive information contained in the admissions database of the University of Cape Town (UCT) between 2010 and 2013 as well as the Quarterly Labor Force Survey conducted at a national level.
I estimate a random utility model of the determinants of choice between five faculties at UCT with nesting structure elicited from the data. I exploit the availability of two sets of national test scores with varying emphasis on measuring overall ability and college adaptability to identify the effect of aptitude-weighted expected earnings while controlling for academic ability directly. The key findings of the paper are the following:
- White applicants are more responsive to differentials in aptitude-adjusted expected earnings than black applicants.
- The most significant determinant of major choice at UCT is the number of science courses an applicant took in high school. However, the choice of high school curriculum is often dictated by the place of residence of the student among the 242 municipalities in South Africa, indicating the relevance of regional inequality.
- Individuals who are likely to have significant political capital tend to choose majors in commerce and humanities. Political capital is proxied by an indicator variable for black applicants from middleclass households coming from municipalities that are electorally dominated by the ruling party.
- Neighbourhood effects shape the choice of individuals through the influence of near-peer role models. Correcting for possible clustering of unobserved preferences along postcodes, a one standard deviation increase in the ratio of near-peers who were admitted to a certain faculty during the last three years is shown to increase the probability of choosing the same faculty by around 10 percent.
- High-achieving applicants who come from less competitive high schools tend to choose high-return majors than similar students from more competitive high schools.
The dynamics of major choice at a selective institution such as UCT is likely to have significant implications for economic and political transformation in the long run through the composition of elites who will be spearheading the process. Primarily, potential inefficiencies in the allocation of talent that might be caused by persistent inequalities will hamper innovation at the top of the socioeconomic pyramid. Moreover, the gravitation of the children of the political elites towards less technical majors may deprive the political class of sufficient interest in productive activities. This, in turn, is likely to leave the elites with little incentives to respect property rights in the future. Hence, policy measures that will improve the availability of science education at high school level or account for the effect of near-peer role models in college admissions may go a long way in terms of shaping the path of economic development.
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