Graduate Earnings:An econometric analysis of returns, inequality and deprivation across the UK

The Department for Employment and Learning has published, as part of its Research Agenda, a research report investigating the extent and source of variation in UK graduate earnings premium.

Based on Higher Education Statistics Agency (HESA) data for 2004/05 leavers from the UK university sector, the report investigates the determinants of graduate earnings. Entitled ‘Graduate Earnings: An Econometric Analysis of Returns, Inequality and Deprivation across the UK’, the report finds that there are substantial variations in earnings according to: gender, the degree subject studied, the region of employment and the occupation and industry of employment.

Further analysis shows:

Gender – there is a systematic gender difference in graduate earnings in the UK; compared to an otherwise identical female graduate, male graduates earn, on average, 3.8% more.

Degree subject emerges as a significant determinant of graduate earnings. For example, compared to the average earnings of a social studies graduate, an otherwise identical graduate with a mathematical sciences degree earns, on average, 5.5% more. An otherwise identical female (male) graduate with a languages degree earns, on average, 7.3% less (13% less).

Region of Employment – there is a systematic regional bias in graduate earnings. Compared to the average earnings of a female (male) graduate employed in Northern Ireland, an otherwise identical female (male) graduate employed in the South East of England (excluding Greater London) earns, on average, 11.1% more (6.7% more); and an otherwise identical female (male) graduate employed in Greater London earns, on average, 29.8% more (25.6% more).

Occupation – graduates employed within ‘high’ status occupations in the UK earn, on average, 23.6% more than their erstwhile classmates employed, for example, within Skilled Trades, Sales and other Elementary occupations. In Northern Ireland the financial reward is significantly less at 16%.

This research will contribute to a growing evidence base as the Department takes forward a review of variable tuition fees and student finance arrangements in the coming months.

Notes to Editors:

1. The report is available to download from the Department’s website on 27 November 2008 at http://www.delni.gov.uk.

2. The report utilises individual-level Higher Education Statistics Agency (HESA) information for the whole population of students leaving UK universities in 2005, combining this information with the employment and salary information obtained six months after graduation in the form of the HESA Destination of Leavers from Higher Education (DLHE) Survey.

3. Due to sample size restrictions, the research paper is pitched in the main at the UK level. However, Northern Ireland comparative analysis has been undertaken where possible to add value.

4. Media queries to the Department for Employment and Learning Press Office on 028 9025 7872. Out of office hours please contact the Duty Press Officer via pager number 07699 715 440 and your call will be returned.