University of Bath

Analysing employment & earnings returns to higher education degrees using administrative data

A comprehensive analysis of the value of undergraduate and postgraduate degrees and how these vary by subject, provider and student characteristics.

The overarching aim of this work is to produce analyses that provide estimates of the economic benefits of undergraduate and postgraduate degrees to individual graduates themselves, to the economy and to the taxpayer.

The research will utilise the Department for Education’s Longitudinal Education Outcomes (LEO) dataset which links together a number of administrative datasets, allowing researchers to follow individuals’ pathways through the education system, into higher education, and then on into the labour market. This project represents an exciting opportunity for policymakers and researchers to work together to better understand the effects of young people’s educational experiences on their earnings and employment outcomes. The project will help us to better understand how the returns to degrees vary by subject, provider and student characteristics such as ethnicity and socio-economic status.

This will aid policymakers when considering the effectiveness of the existing system, as well as helping students in the longer-term to receive more information than ever before when choosing between whether to continue with their education into higher education, further education or entering the labour market.

Specifically, the project will answer the following questions in relation to undergraduate degrees:

  • What are the relative wage and employment returns from attending one university compared to another, or of taking one particular subject compared with another?
  • What are the average absolute wage and employment returns to an undergraduate degree compared to not attending higher education?
  • How do these returns vary across students of different genders, backgrounds and ability levels?
  • What is the estimated absolute impact of taking an undergraduate degree on lifetime tax receipts, benefit payments and the cost of student loans?

Knowledge of the determinants and benefits of postgraduate study is an important yet poorly understood policy area. The project will therefore add value in this area, and will in particular answer the following questions:

  • What are the average absolute wage and employment returns to taking a postgraduate degree compared with just having an undergraduate degree?
  • How do these absolute returns vary across students of different genders, backgrounds and ability levels?
  • What is the estimated absolute impact of taking a postgraduate degree on lifetime tax receipts and benefit payments?

The key to identifying the causal return to attending a given university and taking a given subject is accounting for the differences between students who attend higher education – and specifically the given university/subject – and those who do not. The project will address this by implementing various well-established matching and regression techniques, exploiting the richness of the LEO data to ensure that individuals with and without degrees being compared are as similar as possible along relevant dimensions, and ensuring that a valid estimate of the impact of higher education can be derived.

Research team

Funder

Department for Education

Selected key outputs

The project will result in two policy reports to be published by the Department for Education in early 2018.