My intrepid Mercatus Center colleague Veronique de Rugy is rightly critical of Sen. Tom Cotton’s economically illiterate – if politically convenient – scheme of rebating tariff revenues to taxpayers . A slice:
Cotton’s bill also demonstrates his lack of economic understanding. Mary Lovely, a trade economist at Syracuse University and the Peterson Institute, aptly pointed out to me by email: “Taxpayers are not made whole when tariff revenue is returned to them. Taxes create excess burden by distorting economic choices. These distortions impose costs beyond any income taken in tariff revenue. Anyone who thinks the losses caused by tariffs are fully reflected in new revenue probably flunked public finance.”
This paper explores the importance of pre-market human capital specialization in explaining gender differences in labor market outcomes among the highly skilled. Using new data with detailed undergraduate major information for several cohorts of American college graduates, we establish many novel facts. First, we show evidence of gender convergence in college major choice over the last 40 years. Second, we highlight that women today still choose college majors associated with lower potential wages than men. Third, we report gender differences in the mapping from major to occupation. Even conditional on major, women systematically choose lower potential wage and lower potential hours-worked occupations than men. Fourth, we document a modest gender convergence between the 1950 and 1990 birth cohorts in the mapping of major to occupation. Finally, we show that college major choice has strong predictive power in explaining gender wage gaps independent of occupation choice. Collectively, our results suggest the importance of further understanding gender differences in pre-labor market specialization including college major choice.