Several common trends regarding higher education can be observed across numerous countries. Firstly, there is a noticeable expansion of higher education, with a shift towards a predominant focus on the social sciences. Additionally, there is a discernible increase in inequality among college graduates within the labor market. In Russia, these trends have been evident, and their impact has been particularly pronounced in recent years. Utilizing a unique dataset constructed from open-ended responses to the Russian Longitudinal Monitoring Survey, this study employs the Russian context to investigate the effects of the changing composition of academic majors during the expansion of higher education on the dynamics of wage distribution.

This paper contributes to the existing literature in several ways. Firstly, it expands the standard wage analysis across majors by examining within-major and across-cohort variation, as well as major-specific permanent and transitory variance components along their temporal trajectories. The study demonstrates that the evolving distribution of wages is connected to changes in skill prices and wage shocks induced by economic fluctuations.

Furthermore, the research reveals that variation in skill prices is linked to equilibrium effects resulting from changes in the supply of graduates specialized in different fields. The uneven expansion in certain majors leads to labor market saturation, resulting in an increased wage variance for graduates from the fastest-growing majors. Finally, the study emphasizes the significance of accounting for within-major heterogeneity across cohorts, which may reflect differences in student ability distribution, changes in academic content, and alterations in educational quality over time.