Education, income and earnings - with updates for 2020 Publications
A summary of how education is related with income and earnings, updated with 2020 impacts based on New Zealand Income Survey data.
Author(s): David Scott, Tertiary Sector Performance Analysis, Ministry of Education.
Date Published: July 2021
Average income and earnings benefits of education over the last decade
- Higher-level qualifications continue to provide significant income and earnings benefits. Over the last decade, median weekly incomes for degree-qualified adults aged 25 to 64 have, on average, been around 40% higher than those whose highest qualification was a school one. For those with a Level 4-6 tertiary qualification,1 they’ve been around 23% more.
- When looking just at employed adults, the hourly earnings of those with a degree have been around 35% more than for those with school qualifications only. For those with a Level 4-6 tertiary qualification, they’ve been around 10% more.
- Adults with no qualifications, on average, have received around 20% less in weekly income, and 12% less in hourly earnings, when compared to those with school qualifications only.
Education, income and earnings in 2020
- Median weekly incomes fell by 1.3% between June 2019 and June 2020 – a direct impact of the COVID-19 pandemic. The decline was greater for those without tertiary qualifications, while for those with a degree or higher, there was no decline in median weekly income.
- By comparison, median weekly incomes fell 0.8% between 2009 and 2010, and 3.0% between 2010 and 2011, the main years New Zealand was impacted by the Global Financial Crisis, and the last time the country experienced a fall in median incomes.
Differences for men and women
- Not taking account of differences in occupation or other factors, degree-qualified men earn 15% more per hour than degree-qualified women. Men with Level 4-6 tertiary qualifications earn 19% more than women with Level 4-6 tertiary qualifications. The relative benefits for a man gaining further qualifications beyond school are higher than they are for a woman.
Differences across ethnic groups
- Māori with no or low-level qualifications earn around 3-4% less per hour, on average, than European/Pākehā workers with no or low-level qualifications. For those with Level 4 or higher tertiary qualifications this difference is between 8% and 10% less. This wage disadvantage is larger for Pacific peoples, and larger still for Asian and other groups.
Education, earnings and age
- Wages generally increase as you age and gain work experience, regardless of level of education. However, when compared to lower-level-educated adults, higher-level educated adults not only earn more, but their hourly earnings also grow at a faster rate.
How New Zealand compares with other countries
- The difference between what a high-qualified worker earns and what a less-qualified worker earns is much smaller in New Zealand than in many other OECD countries. This does not mean higher qualifications are necessarily worth less. The majority of OECD countries with low relative earnings benefits, including New Zealand, have actual earnings that are above the OECD average. Most of them also have higher levels of educational attainment in their population, and well-developed social support systems for more disadvantaged groups.
- Level 4-6 tertiary qualifications include diplomas and advanced certificates below degree level that typically provide vocationally or trade-specific skills and credentials, e.g. NZ Certificate in Plumbing or NZ Diploma in Horticulture.