Association for Public Policy Analysis & Management

The process of skill specialization starts before college, with different skills affecting students' choice of major and their later labor market returns. This paper studies the role of multi-dimensional ability and secondary track choices on college preparedness and labor market outcomes. We do so by estimating a sequential choice model of education using Swedish administrative data. Individuals sort at each stage based on prior choices and three dimensions of ability: cognitive, interpersonal, and grit. We find strong absolute and differential sorting on abilities in both high school and college choices. After accounting for cognitive and non-cognitive abilities, we find that high school decisions are an important determinant of college choices. Both abilities and secondary track choices are important determinants of college enrollment, college major choice, college graduation, and labor market outcomes. The labor market returns to abilities and secondary track choices vary considerably by degree and major. Not accounting for high school decisions and multidimensional abilities can overstate the role of preferences and understate selection on gains and the heterogeneous returns to different abilities across different college majors. While secondary track choices tend to exacerbate inequality, we show that policies encouraging students to take more challenging secondary tracks can help ameliorate it.