Labour Market Returns to Further Education for Working Adults
The Department of Labour (DoL) has released a report that investigates the effects of non-degree, provider-based tertiary education on the earnings of older learners. This study uses the Employment Outcomes of Tertiary Education dataset, held by Statistics New Zealand which contains information derived from tax and benefit data collections and the education system.
Author(s): Sarah Crichton and Sylvia Dixon, Department of Labour
Date Published: June 2011
The analysis tracks people aged 25 and over who had some recent labour market experience and compares their earnings profile to a similar group of people who do not undertake further study.
It finds only limited benefit from study, as measured by the earnings differential between the two groups. Women who gained qualifications at higher levels of the New Zealand Qualifications Framework (NZQF) benefitted from higher earnings 3 years after study, but men did not. Learners who gained qualifications at lower levels in certain fields of study also benefitted, but these were the exception.
The Department of Labour suggests that the limited benefits of further study may be due to many students being qualified at an equivalent or higher level already, and hence their level of educational attainment was not raised as a result of gaining the new qualification.
This paper investigates the earnings benefits obtained by adults aged 25–64 years who completed a certificate or diploma-level qualification (levels 1–6 on the New Zealand Qualifications Framework) by studying at a tertiary education provider between January 2003 and December 2005.1
The paper’s main analysis uses longitudinal administrative data from the Employment Outcomes of Tertiary Education (EOTE) data set. The EOTE data set lacks some important variables (including measures of hours worked and wage rates). Therefore, the Department of Labour extended the main findings through a supplementary analysis of the research problem using longitudinal survey data from the Survey of Families, Incomes and Employment (SoFIE).
To estimate the impact of gaining a certificate or diploma, the Department compared the growth in the average monthly earnings of the students from before the enrolment to three years after the qualification was gained with the earnings growth experienced by a comparison group of matched non-students over the same period. The Department analysed the difference in earnings that was apparent in the third year after the students completed their qualifications.
Level 1–4 certificates
- Students who completed a certificate at levels 1–3 or level 4 generally had not increased their average monthly earnings, relative to those of the comparison group (matched non-students), by three years after completion.
- Students in a small number of specific fields of study did obtain earnings benefits. Those who completed certificates in most other fields experienced no effect or reductions in their relative earnings.
Level 5–6 diplomas
- Diplomas were associated with an increase in relative earnings for women but not men.
- As for certificates, there was substantial variation in impacts by field of study. Diploma students in some specific fields gained substantial increases in their relative monthly earnings, while those in other fields experienced relative earnings losses or no significant effect.
Average monthly earnings are affected by changes in hours of work as well as changes in wage rates. The beneficial impacts of further education on earnings, when experienced, may have been due to an increase in hours worked, an increase in wages, or a combination of both, and it is not possible to separately identify those two effects.
1 Qualifications that were gained through industry training and short qualifications involving less than 3 months of study were excluded.
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