How do graduates' earnings change over time? Publications
This report looks at the post-study earnings of those who borrowed through the Student Loan Scheme. It looks at the earnings of people three years after they left study and again five years after they left study. The analysis provides new information on the extent of change in the earnings of graduates who studied at different qualification levels.
Author(s): Jamie Hyatt and Roger Smyth, Ministry of Education.
Date Published: April 2006
One of the most important ways of assessing the outcomes of tertiary education is to look at how much people earn following study. People's earnings are a reflection of the amount of value they are creating for their employers. So earnings are a good proxy for human capital. Tracking changes in the earnings of people who have undertaken different types of tertiary education gives us a good understanding of the relative value of different types of tertiary education and how human capital changes over time.
This study used data from the integrated dataset on Student Loan Scheme borrowers to look at changes in earnings. The study looks at two groups of students – those who last studied in 1997 and those who last studied in 1999. For the first group, it looks at earnings three years post study and again five years post study and works out how earnings changed over that time for those who studied at different qualification levels. It then compared the experiences of that group three years after study with the experiences of the 1999 leavers at a corresponding stage.
The study found the premium paid for completion of a masters degree five years after study is higher than the premium observed three years post study. For a bachelors degree, the premium is unchanged – the earnings of those who completed and those who didn't have risen at roughly the same rate between the third and fifth years post study. By contrast, at lower levels, the premium has decreased; the earnings of those who completed successfully are still ahead of those who studied but didn't complete, but the margin has narrowed in the fourth and fifth years following leaving study.
The report also finds that the earnings of all groups in the 1997 cohort rose between 2000 and 2002 in real terms. The largest increases were experienced by those who had studied at the certificate level – reflecting the strengthening of the labour market over that time – and at the masters level, where graduates appear to be more highly valued by the labour market over time.