Attending university increases women’s earnings at age 29 by 26% and men’s by 6%: but this varies hugely by degree choice and prior attainment of students, a new study has revealed.
On average, attending higher education (HE) increases the age 29 earnings of men by 6% and women by 26%. If focus is put on the impact of graduating from higher education, these returns rise to 8% and 28%, the study by UK’s Institute of Fiscal Studies shows.
The study, which was commissioned by Department for Education (DfE), was conducted by Chris Belfield, Jack Britton, Franz Buscha, Lorraine Dearden, Matt Dickson, Laura van der Erve, Luke Sibieta, Anna Vignoles, Ian Walker and Yu Zhu.
Their main findings are as follows:
- Those who attend HE earn a lot more on average than those who do not. At age 29, the average man who attended HE earns around 25% more than the average man (with five A*-C GCSEs) who did not. For women the gap is more than 50%.
- A large portion of this difference can be explained by differences in pre-university characteristics: a typical HE student has higher prior attainment and is more likely to have come from a richer family than someone who does not attend. They would therefore be expected to earn more, even had they not gone to university.
- Once we account for differences in pre-university characteristics, the researchers estimate the average impact of attending HE on earnings at age 29 to be 26% for women and 6% for men. If focus is given to the impact of graduating, these returns rise to 28% and 8% respectively.
- The higher returns for women may be driven by the fact that women who attend HE typically work longer hours than those who do not. This impact on working hours may well be causal, but it may also be larger at age 29 than at later ages if graduates delay having children.
- Importantly, age 29 is relatively early in an individuals’ career. There is strong evidence that the earnings of men who attend HE continue to grow faster than their non-HE counterparts after age 30. This is likely to result in the returns to HE for men being larger at later ages than we are able to estimate here. For women, the divergent trends in earnings by education type after age 30 are less clear.
- Not all degrees are the same, and subject choice appears to be a very important determinant of returns. For men, studying creative arts, English or philosophy actually result in lower earnings on average at age 29 than people with similar background characteristics who did not go to HE at all. By contrast, studying medicine or economics appears to increase earnings by more than 20%. For women, there are no subjects that have negative average returns, and studying economics or medicine increases their age 29 earnings by around 60%.
- Institution choice also appears to be highly important, as there is considerable variation in returns. For men, there are 12 institutions (accounting for 4% of male students) for which we estimate statistically significantly negative returns at age 29 on average, while there are 18 universities with average returns of more than 20%. For women, despite high returns on average, there are still two institutions (0.4% of female students) which have statistically significantly negative returns at age 29, while there are 66 institutions with returns of more than 20%.
- The researchers estimate that 67% of men and 99% of women (and hence 85% of students) attended universities that have significantly positive returns on average by age 29.
This is the second in a series of reports commissioned by the DfE, that makes use of the new Longitudinal Education Outcomes (LEO) dataset to improve information on the value of HE degrees. The dataset, developed in collaboration with the DfE, tracks English students through school, college, university and into the labour market. This report, for the first time, uses the dataset to compare individuals who went to HE to those with similar background characteristics who did not.
This pioneering dataset enables us to account for many of the differences between those who do and do not attend HE, but there are many other factors which may affect this decision that are not accounted for, such as passion or preferences. Also these estimates focus on the monetary returns to university, which may not fully reflect the wider society benefits of these degrees. As such, some caution should be executed when interpreting these findings.