Summary

The analysis in this report extends an earlier study 'What factors impact on graduates' earnings three years post-study?' which examines the earnings of people who used the Student Loan Scheme and left study between 1997 and 2001.

This report presents the results of a study of people's earnings in the years following tertiary study. The earnings of those who used the Student Loan Scheme, and left study between 1997 and 2001, were related to their personal, educational and employment-related industry factors – factors commonly found to influence income levels. The study used a logistic regression model and a bagging technique. This approach was intended to isolate the independent relationship of each factor to earnings. This report extends an earlier study of earnings three years after tertiary study.

The study found that the individual's industry of employment, their type of tertiary education provider, the field and the level of study significantly influenced their earnings. The person's prior activity was also a significant influence on their earnings. The completion of a qualification, in combination with level and field of study, emerged as another strong influence on earnings. The interaction effects of some of the factors exerted a greater influence on earnings than when these factors were considered individually.

The earnings advantages, or the premiums, for tertiary education summarised here were estimated for each factor while holding constant the other factors that influenced earnings.

Gender and age on leaving tertiary study influenced earnings. Age was one of the strongest factors influencing earnings – largely because it is a proxy that captures the effects of previous labour market experience on income. The disparity in earnings due to gender and ethnic group narrowed for those with higher levels of study.

The higher the level of study, the higher were people's earnings. The completion of a tertiary qualification at any level also increased earnings. The highest premium was earned by people who had completed a bachelors degree. Individuals with a bachelors degree earned 28 percent more than those who did not complete their bachelor-level studies. The second largest premium earned was among those who completed a level 5 to 7 diploma. This group earned 14 percent more than those who studied towards level 5 to 7 diplomas but did not complete their studies. The premium for completing a postgraduate qualification was lowest because these individuals already earned a premium for their bachelors degree.

Of those with a tertiary qualification, the predicted earnings of individuals with a bachelors degree were about 36 percent higher than the predicted earnings of those who completed a level 1 to 3 certificate. People who held a postgraduate qualification earned about 19 percent more than those with a bachelors degree.

Study in technical or vocational fields increased the chance of higher earnings and working in an industry linked to their field of study further enhanced this. A completed bachelors degree in a technical or vocational field of study boosted earnings compared to those who studied in generic fields like society and culture.

Comparing the incomes of people who undertook tertiary study without completing a qualification, the predicted earnings of those who studied at bachelors level were about 24 percent higher than the predicted earnings of those who studied towards level 1 to 3 certificates. People who studied at postgraduate level earned about 30 percent more than individuals who studied at bachelors level.

There were no significant differences in the average earnings among the five three-years-after-study cohorts. Likewise, there were no significant differences among the three five-years-after-study cohorts. However, people's earnings were, on average, significantly higher five years after leaving study than three years after leaving study. There was also considerable variation in earnings that related to the type of tertiary education provider. The analysis showed that the interaction of the type of provider and the field of study significantly influenced earnings. When the prior activity of individuals was combined with other factors, the model predicted significant increases in earnings. The study results clearly showed that the accumulation of work experience results in an increase in the probability of higher earnings.