Executive Summary

Main Findings

Level 1 to 3 certificates are associated with lower employment and income than school qualifications, but are better than having no qualifications at all. The social outcomes for people with level 1 to 3 certificates are similar to those of people with no qualifications.

Level 4 certificates are associated with higher employment and income than school qualifications. Men with level 4 certificates have very good rates of employment and relatively high incomes, probably due to the high demand for trades qualifications at this level. There is some evidence for better social outcomes for women with level 4 certificates, but not for men.

Diplomas are associated with similar employment rates as bachelors degrees, but slightly lower income. Women with diplomas are likely to have better health, have higher overall life satisfaction, are more likely to volunteer and to read to their preschool children than women with no qualifications. These effects are less evident for men.

There is evidence that education can have an effect on social outcomes over and above, or independent of, its effect on improving employment and income.

The clearest evidence of social outcomes from tertiary certificates and diplomas is for greater maternal support for their children's learning. These effects are largely independent of employment and income.

Purpose

This report examines the economic and social benefits associated with tertiary certificates and diplomas. These include employment, income, well-being, social participation and intergenerational benefits. This analysis helps inform understanding of the value of these qualifications to individuals, their families and wider society.

Tertiary certificates and diplomas represent a significant proportion of the tertiary education system. They provide entry to a wide range of occupations. Qualifications at this level also provide a pathway to higher levels of learning. More than a third of the population aged 25 to 39 holds one of these qualifications as their highest qualification. However, previous research on the benefits of tertiary education has tended to focus more at bachelors level and above, and treat tertiary certificates and diplomas as a single group of qualifications.

Approach

The data used in this study focuses on people aged 25 to 39 years. This covers people who are likely to have completed their initial education and excludes the older group of working age people, where work experience, life experience and other factors may have a greater effect on outcomes than education.

The report makes use of a range of point-in-time data sources. As such it can only draw attention to associations between education and economic and social outcomes. It cannot demonstrate causation. However, the discussion of social outcomes includes analysis to explore the extent to which these outcomes are associated with, or independent of, the economic effects of education. In a number of the social outcomes, the small size of the subsamples used from the survey data may limit the extent to which definite associations can be found.

The report looks at the highest qualification attained. For the purposes of this analysis, all post-school qualifications are treated as higher than school qualifications. However, people who have studied at more than one level are only counted at the level at which they attained their highest qualification. For level 1 to 3 certificates, in particular, this means that the group being examined are those who only completed a qualification at this level and excludes those who went on to complete a higher level qualification.

Tertiary certificates and diplomas

Tertiary certificates and diplomas cover a range of vocational and general qualifications below bachelors degrees. In the New Zealand tertiary education system, these qualifications can be obtained through tertiary education providers, as well as industry training organisations who manage work-based learning. Tertiary certificates and diplomas can be grouped into three broad levels:

• Level 1 to 3 certificates are equivalent in level to school qualifications and generally involve only a few months of full-time equivalent study. They prepare people for entry to employment or further education. The most common field in which people hold these qualifications is management and commerce. People with these qualifications are most likely to work as sales and service workers or clerks.
• Level 4 certificates provide more advanced employment-related education and generally involve 6 months or one year's full-time equivalent study. The most common field in which people hold these qualifications is engineering. People with these qualifications are most likely to work as trades workers.
• Diplomas are at level 5 to 7 and have a greater focus on technical and professional knowledge and generally require one or two years' full-time equivalent study. The most common field in which people hold these qualifications is health. People with these qualifications are most likely to work in professional and technician and associate professional occupations.

Employment and income benefits

People with level 1 to 3 certificates are more likely to be employed and earn higher incomes than those with no qualifications, but are slightly less likely to do so, on average, than those with school qualifications only.

Level 4 certificates provide greater employment and income benefits than school qualifications only. The employment and income benefits at this level are greater for men than for women.

Employment rates for people with diplomas are very similar to those for bachelors degrees. However, people with diplomas have lower incomes than those with bachelors degrees.

The relative employment and income benefits of tertiary certificates and diplomas vary distinctly across ethnic groups. Asians get relatively less advantage from school qualifications and relatively smaller advantage from tertiary qualifications than people in other ethnic groups. This may be related to the large number of recent Asian immigrants for whom lack of recognition of qualifications and having English as an additional language are barriers to higher-paid employment.

Employment and income advantages are similar for European, Māori and Pasifika women. European men gain much greater advantages than Māori and Pasifika men.

Employment and income benefits vary by field of study. The variations are greater for men than for women, probably reflecting different patterns of labour force participation and occupational choice. People with certificates and diplomas in information technology have lower rates of employment and lower incomes than others with the same level of qualification. This reflects an oversupply of these qualifications. Men with qualifications in engineering and building have consistently higher employment and income than men with the same level of qualification in other fields of study. Previous research has demonstrated a shortage of qualified people in these areas. Women with qualifications in management and commerce tend to have higher incomes than women with the same level of qualification in other fields of study.

Social benefits

There is evidence that women with diplomas have better well-being than women with lower-level qualifications. The association between education and well-being is less clear for men, and for women with tertiary certificates. Women with diplomas are likely to have better health status, even once differences in income and employment are controlled for. They are also likely to have greater overall life satisfaction.

People with level 4 certificates and diplomas are likely to have better economic standards of living than those with no qualifications. Some of this is due to higher income and greater employment. However, qualifications appear to be directly associated with better economic living standards, particularly for women, over and above the related effects of income and employment.

There is limited evidence that attaining a tertiary certificate or diploma is associated with greater participation in society, in terms of measures such as volunteering and voting. There appears to be some association with increased volunteering for women who have level 4 certificates or diplomas. Men with tertiary certificates and diplomas appear to be more likely to vote than men with no qualifications.

There is clear evidence that parents' attainment of tertiary certificates and diplomas is associated with greater support for their children's learning. They are more likely to have a greater number of educational resources in the home. Mothers with level 4 certificates and diplomas are more likely to read to their preschool children.

Conclusions

It is clearly evident that tertiary certificates and diplomas are associated with higher rates of employment and higher incomes, particularly when compared with having no qualifications. Qualifications at level 4 and above are generally associated with better employment and income when compared with having just a school qualification. These findings are consistent with the vocational focus of education at this level.

The evidence of social benefits associated with tertiary certificates and diplomas is less clear. It would seem that women get greater relative social benefits from education at this level than men. Some of the social benefit can be explained by the associated economic benefit. That is, improved employment and income is associated with improved social outcomes. However, part of the social benefit is independent of, or over and above, the economic benefit. The clearest social benefit of education at this level is intergenerational, with a strong association to greater support by parents for their children's learning, particularly on the part of mothers.

Having a level 1 to 3 tertiary certificate as the highest qualification is associated with better employment and income than having no qualification, but not as good, on average, as having a school qualification. There is very limited evidence for any social benefits from level 1 to 3 certificates compared with having no qualifications. This may reflect a double selection effect for people who have level 1 to 3 certificates as their highest educational qualification. They are more likely to have limited school education and they also have not gone on to complete further tertiary education. The qualifications are also of quite short duration and narrow focus, compared with school qualifications. This suggests that level 1 to 3 study is of most benefit to people with no or low school qualifications, and is best seen as a pathway to higher levels of tertiary study.