1 Júlia Varga Hungarian Academy of Sciences Institute of Economics SEBA – IE CASS - IEHAS...

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Júlia VargaHungarian Academy of Sciences

Institute of Economics

SEBA – IE CASS - IEHAS Economics of Crisis, Education and Labour

Chinese - Hungarian International Conference 30. 06. 2011, Budapest

The Labour Market Value of Higher Education in the 2000s in Hungary: Effects

of the Field of Study and Institution of Graduation

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• Sharp increase in the supply of higher education graduates

• Number of works document how the average return to higher education has changed in Hungary, but very little is known about the causes of differences in labour market success among graduates

• Large differences in earnings and employment probability across fields

• Wage dispersion of higher education graduates has increased

Motivation

SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

3SEBA – IE CASS - IEHAS Conference

Budapest 30.. 06. 2011.

Number of graduates, 1990-2009

2000

030

000

4000

050

000

6000

0

1990 1995 2000 2005 2010Year

Full-time students Total

4

100

120

140

160

180

2002 2004 2006 2008 2010year

Full sample Aged 22-30

College level

160

180

200

220

240

2002 2004 2006 2008 2010year

Full sample Aged 22-30

University level


Wage returns to higher education (%) by level of education (college/university)

Based on data of Hungarian Wage Tariff Surveys.

Dependent variable: (log) earnings;

Control variables: educational categories dummies, gender, experience, experience squared.

The percentage effect is (eß–1) × 100 %

. N (Total ):190-230 thousands; N ( young): 38-40 thousands

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Research question

Does the field of study and the institution of graduation affect early labour market success (earnings and employment probabilities) of graduates?


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Data

Survey of Hungarian Higher Education Graduates 2010

• Representative sample of graduates in 2007

• Sample 10 % of the population of graduates (4507 persons)

• 10 fields of study, 25 institutions

SSEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

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Average monthly net earnings and employment rates by field of study

Field of study Net monthly earning 000 HUF

Employment rate %

Business, economics 159 88.0Informatics 155 88.6 Law 152 87.4

Engineering 145 85.9Social 125 86.4

Medicine 122 86.7

Agrarian 120 86.4Humanities 120 81.9Science, mathematics 117 72.1

Teacher training 111 83.2Total 136 85.5


8SEBA – IE CASS - IEHAS Conference

Budapest 30.. 06. 2011.

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Within-field variation in average earnings

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9 SEBA – IE CASS - IEHAS Conference

Budapest 30.. 06. 2011.

Within-field variation in employment probability

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0 Humanities Engineering Teacher training

ScienceAgrarian Business, economics

Law Medical Socialinformatics

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Employment rate

10SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.

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Measurement problems

• non-random selection of students into different fields of study and different institutions

• more able students are admitted to more selective institutions and fields of study

• factors may influence both the choice of field of study and of institution and earnings (abilities)


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Measurement problems

• two methods are used to control for the potential self-selection of graduates

• effect of field of study: propensity score matching method, average treatment effect on the treated

• effect of institution: HLM-like regressions with field of study * institution fixed effects


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Method 1. Effect of the field of study

propensity score matching method – average treatment effect on the treated

E(Y1|D=1) – E(Y0|D=1)

P(X)=Pr(D=1|X)=E(D|X)

E[Y1|D=1,P(X)]-E[Y0|D=0,P(X)]

D =1 treated: person graduated from the given field of study

D=0 control: person graduated from another field of study

Y1 – outcome measures (earnings, employment probability)

X – observed covariates


Budapest 30.. 06. 2011.

Method 1. Effect of the field of study

gender,

age group dummies (>27 ; 27-35; 35<)

educational attainment of father and mother (educational category dummies)

parents or grandparents have qualification from the same field of study in which the person graduated

type of settlement dummies

type of secondary school dummies

institution/field specialization was the first choice of the graduate

the person completed his/her studies in the normal length of time (yes=1, no=0)

Matching methods: nearest neighbor method (ATTND) and stratification method (ATTS)

Independent variables (observables):

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Field of study Earnings effectEmployment effect

Matching methodATTS ATTND ATTS ATTND

Agrarian Not significant Not significant 0.105 0.149

Humanities Not significant -0.100 Not significant -0.084

Business, economics0.215 0.224 Not significant Not significant

Law0.184 0.149 Not significant Not significant

Teacher training-0.142 -0.147 -0.063 -0.078

Social-0.097 Not significant

Not significant Not significant

ScienceNot significant -0.181 Not significant Not significant

Results 1. Effect of the field of study



Methods 2. Effect of the institution of graduation

iiINTtINTt

iINT ti Xdy (i=1….N) (1)

INTtk INTtktINTkINTt

j

jjINTt ZINTtq (2)

where , qINTt = INTt from (1)

16 SEBA – IE CASS - IEHAS Conference Budapest 30.. 06. 2011.


iiINTtINTt

iINT ti Xdy Two outcome measures:

1) yi= Net earnings – OLS

2) yi= Employment probability -probit

INTtk INTtktINTkINTt

j

jjINTt ZINTtq Weighted Least Squares

Weights= : inverse of var qINTt estimated from (1)

(1)

(2)



– step 1

gender,

age group dummies (>27 ; 27-35; 35<)

educational attainment of father and mother (educational category dummies)

parents or grandparents have qualification from the same field of study in which the person graduated

type of settlement dummies

type of secondary school dummies

Institution/field specialization was the first choice of the graduate

the person completed his/her studies in the normal length of time (yes=1, no=0)

Independent variables



– step 2

Field of study dummies

Institution dummies

College quality:

- applicants/admitted

- number of students per professor

Independent variables

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Results 2. Effect of the institution of graduation

X Significant employment effect

Significant earnings effect

Both effects are significant

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Employment effect



Budapest 30.. 06. 2011.

Conclusions

• some fields of studies have casual effect on early labour market success of graduates

• earnings of graduates from business and economics and from law are higher

• earnings and employment probabilities of graduates from teacher training are lower

• no robust effects of the institutions, with the exception of BGF (higher wages, lower employment probabilities)

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Thank you!


1 Júlia Varga Hungarian Academy of Sciences Institute of Economics SEBA – IE CASS - IEHAS...

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