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)
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