"Majoring in economics probably signals desirable traits to employers, but the degree to which this is true, and the impact on expected earnings is unclear. (On the latter point, note that college major plausibly plays much less of a signaling role decisions about raises and promotions than it does in hiring decisions.)
It’s worth noting that majoring in economics doesn’t have to be an accurate signal of a desirable trait in order for it to have signaling benefits: all that’s necessary is that employers believe that it’s a signal of the trait.
The fact that economics majors make more is a signal that they’re better employees
Unless one attributes the wage gap entirely to signaling (which would correspond to a belief that employers are generally mistaken in paying economics majors more), one can know that economics majors tend to be better workers, even if one doesn’t know why. Thus, employers will take the fact that economics majors make more money as a signal of quality. So the wage gap itself gives rise to signaling benefits.
According to a survey of the The Chronicle of Higher Education:
- Economics is one of the most desired majors in business (pg. 67)
- 19% of employers state that they look for specific majors, 44% value some over others, 34% say that they balance it with other factors, and 3% say that it’s not important at all. (pg. 64).
A 2013 Gallup poll of business leaders asked about the weights that they assign to different factors when making hiring decisions. What they indicated is summarized below. (The columns starting with the second are the percent who ranked the factor as “very important”, “somewhat important” “not very important” and “not at all important”)"