Many university students wonder how much money they will make after they graduate. Students even often choose their major based on predicted salary outcomes. However, according to a recent paper by Irisa Zhou, a PhD candidate in the Department of Economics, this way of thinking misses something important. Her 2025 paper “Learning the Major-Industry Mismatch” investigates a deceptively simple question: if students study the same subject, why do their career and income trajectories diverge so dramatically?

Job uncertainty 

Zhou’s interest in this topic is partly shaped by her own academic path. As an undergraduate at McGill University, she entered university unsure of what she wanted to study and relied on common assumptions about different majors to decide on her major. 

After realizing her first program wasn’t the correct fit, Zhou turned to economics. She eventually chose to pursue graduate studies, partly because she thought everyone needs a graduate degree to succeed. However, she also realized that the additional training associated with a PhD is a great way to establish credibility.

Information frictions and major-industry mismatch

At the core of Zhou’s research is the idea of information frictions. Information frictions describe the gap between what students know when making career decisions and what they would need to know to choose well. 

Students rarely have clear information about what different jobs actually involve, how their skills translate across industries, and how career paths unfold over time. As a result, many graduates enter roles that are poorly matched to them and only learn this through costly trial and error, often after years in the labour market.

This information gap plays a central role in what Zhou calls major-industry mismatch. While a university major provides a broad set of skills, industries value and reward those skills very differently. Two graduates with the same major might choose two different industries to join, but one industry may be better suited for the skills associated with this major. In turn, the earnings associated with each sector may be very different. 

Findings from Zhou’s paper

One of the most striking findings in Zhou’s paper is that the variation in earnings observed between graduates with the same major can be just as large as the variation observed between graduates across different majors due to the major-industry mismatch. 

She compared economics and library sciences in her study, which are the highest-earning and lowest-earning college majors in the US, respectively. Despite this, there is still significant overlap in the distribution of earnings between the two fields. This dispersion is not driven primarily by differences in ability. Instead, Zhou finds that it reflects how quickly individuals learn whether they are well matched to their industry.

Zhou demonstrates this relationship by using LinkedIn as a source of variation in access to information. By making job postings, skill requirements, and alumni career paths openly visible to students at a low cost, LinkedIn helps reduce information frictions.

Comparing cohorts before and after the widespread adoption of LinkedIn in Canada, Zhou finds that the latter cohorts perform better in the labour market. These graduates are more likely to sort into industries that better match their skills and interests, while earlier cohorts face higher levels of mismatch. 

For example, graduates with access to LinkedIn spent four fewer months on average in the first industry they worked in than those without — this indicates that the availability of information about an industry being better for them enables them to move more quickly to this industry.

This contrast supports Zhou’s central claim that reducing information frictions improves career matches and helps explain why graduates with the same major can experience very different earnings outcomes.

How this related to university students

For U of T students, Zhou’s research offers a different way of thinking about majors and future salaries. While students often feel pressure to choose the ‘right’ program early on, her findings suggest that outcomes depend far less on the name of a degree than on how well students understand their options and what the best match for their skills might be.

Access to information plays a critical role in shaping early career decisions. Being able to see what graduates with similar backgrounds actually do, whether through alumni networks, job postings, or online platforms like LinkedIn, helps students form more realistic expectations about different industries. The earlier students learn where their skills fit, the easier it is to adjust the course before becoming locked into a path that does not suit them.