The question of the extent to which the labor market rewards general knowledge vs. specific got further attention in recent years. The rate of technological changes observed in the last two decades seems to reward flexibility of skills and ability to adapt new technologies. Nonhierarchical firms relying upon direct horizontal communication among workers and on task diversification reward multi-skilled agents. Both types of transferability of skills are likely to be accumulated as general knowledge rather than specific one.
Transition economies and Russia in particular pose an interesting case to study changes in returns to general vs. specific human capital as it passes through the period of serious changes driven by the necessity to catch-up with the technological progress and to move from the planned economy to a market one. Little is known about the changes in returns to particular fields of education in transition countries, however.
The nationally representative data on Russia used in the paper allow shed some light on the issue. In particular, we study variation in returns to five groups of majors - pedagogic, engineering, law or economics, humanities and medicine - in terms of wage and employment stability. We find significant variation in returns. Surprisingly, we find the highest positive wage premiums to major in engineering, both for males and females, and for higher and secondary degree holders. The year of graduation turns out to be statistically insignificant implying that the “new” degrees are not systematically better or worse than the “old” ones.