Education, achievements and labour market outcomes

A presentation to the Graduate Labour Market Forum, 15th December 2003, Westminster, London

Peter Elias, University of Warwick

Kate Purcell and Nick Wilton, University of the West of England

Does it pay to go to university?

• How has the premium associated with a first degree changed over the last 15 years?

• What factors are associated with higher earnings?

• What other benefits do we find associated with higher education?

• How are women faring relative to men?

How has the premium associated with a degree changed over the

last 15 years?

• Previously we showed that there was some evidence of a decline in the graduate earnings premium, but still significant and major differences in the rate of growth of earnings of graduates compared with non-graduates

• What kind of earnings growth would we expect?

What is the average real rate of growth of earnings for young degree-

holders and non degree holders?

Use Labour Force Survey (1993-2000) to determine the average annual rate of growth of real earnings between

ages 22 and 29 (full-time gross weekly earnings)

Degree No degree

Men 9.7% p.a. 5.3% p.a.

Women 7.9% p.a. 4.9% p.a.

Average annual rate of growth of real earnings by gender

0

1

2

3

4

5

6

7

8

9

Female Male

1980 Graduate

1995 Graduate

Average annual rate of growth of real earnings by age

0

1

2

3

4

5

6

7

8

31 years or below 32 to 37 years 38 years and older

1980 Graduate

1995 Graduate

Average annual rate of growth of real earnings by type of institution attended

0

1

2

3

4

5

6

7

8

9

Pre 1992 University Post 1992 University HE College

1980 Graduate

1995 Graduate

Average annual rate of growth of real earnings by subject studied

0 2 4 6 8 10 12 14 16 18

Education

Arts

Languages

Interdisciplinary

Natural Sciences

Other vocational

Humanities

Medicine & related

Engineering

Social Sciences

Business studies

Maths & Computing

Law

1980 Graduate

1995 Graduate

Distribution of average annual growth rates of real earnings, 1980 graduates and 1995

graduates

0

2

4

6

8

10

12

14

16

18

20

1980 Graduate

1995 Graduate

What factors are associated with higher earnings?

• Conducted a detailed multivariate analysis of the variations in earnings of graduates in full-time employment in 2002/03 (excluding those aged 38 and over)

• Tested for variations associated with social class, entry qualifications, class of degree, post graduate qualifications, type of institution, age, gender, a range of job characteristics and family situation

What factors are strongly related to variations in earnings?

• Working hours (1% per hour)

• Degree required (18% addition)

• Sector (ICT, banking, business services – 15%)

• Private sector (10% more than public sector)

• Size of firm (10% less if only 1-9 employees)

• Age (10% more per year)

• Disability (10% less)

• Class of degree (12% less for a third class)• Subject studied (Arts -17%, languages -9%, maths &

computing +9% relative to social sciences)• Entry qualifications (<16 UCAS points -6%) • Lives in London and SE (+26% for Inner London)• Postgraduate qualification (see next slides)• SOC(HE) (see next slides)

What factors are strongly related to variations in earnings? (contd.)

The London premium (relative to graduates working in the rest of the UK

0%

5%

10%

15%

20%

25%

30%

Inner London Outer London South East

Well the City definitely is linked in with financial reward I mean that’s very clear, I mean one of the problems I face now is I could step out of the City into a corporate role but looking at the salaries that are paid, it’s horrendous, you know we’re talking a lifestyle change which I’m not entirely keen to make.

(Freelance finance consultant, graduated in Russian and German from old university, male age 31)

0

5

10

15

20

25

30

35

Taken short job-related course

since graduating?

Taken u/g degreesince graduating?

Taken postgradcert/dip sincegraduating?

Taken prof. qualprog. sincegraduating?

Taken Mastersdegree sincegraduating?

Taken PhD sincegraduating?

Taken othercourse sincegraduating?

Male

Female

Courses taken since 1995

Postgraduate qualifications, training and earnings

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Short course(s)Undergraduate

degreePostgraduate

cert. or dip.Professionalqualification

Master'sdegree

PhdProgramme Other

% c

ha

ng

e r

ela

tiv

e t

o t

ho

se

wh

o t

oo

k n

o c

ou

rse

s

Earnings premium by SOC(HE) - relative to graduates in non graduate jobs

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

Traditional graduatejob

Modern graduatejob

New graduate job Niche graduate job

% in

crea

se in

ear

nin

gs

rela

rtiv

e to

no

ng

rad

uat

e jo

bs

Men

Women

What about social class and gender?

• Social class is not directly associated with variations in earnings – effects are indirect – but, fee-paying school still adds 5% seven years after graduation!

• Type of university attended does have some impact, but only for very small number of institutions

• Gender differences remain (8% more for men)

In my workplace, my type of work is done...

0

5

10

15

20

25

30

35

40

45

…almost exc bymen

…mainly bymen

…a fairly equalmix

…mainly bywomen

…almost exc bywomen

% o

f yo

un

g m

en

or

wo

me

n i

n f

ull

-tim

e e

mp

loym

en

t

Male

Female

+7%

-8%

Overall satisfaction with career to date (- those in full-time employment only)

0

10

20

30

40

50

60

70

80

< 9,999 10,000-11,999

12,000-14,999

15,000-17,999

18,000-20,999

21,000-23,999

24,000-26,999

27,000-29,999

30,000-32,999

33,000-35,999

36,000-39,999

40,000-49,999

50,000-59,999

60,000 +

*Combining 'Not very satisfied' and 'dissatisfied'

Very satisfied

Reasonably satisfied

Not satisfied*

What about the future?

At the point I am at now, if I wasn’t having a baby, I may well have looked or be looking for another job in the next 6 months, purely because I’ve been promoted from within and they never reward you adequately. They never give you the same salary as they would if they recruited externally. I am dissatisfied with my salary at the moment, but I can’t really say anything to the people I work with because I am maternity leave and they’ve known I would be going on maternity leave for quite some time. It’s going to be something I am going to have to address when I get back.

(Merchandising manager working for global corporation, graduated in business & financial services, female age 29)