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Graduate Returns, Degree Class Premia and Higher Education Expansion in the UK

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  • Robin Naylor
  • Jeremy Smith
  • Shqiponja Telhaj

Abstract

We investigate the extent to which graduate returns vary according to the class of degree achieved by UK university students and examine changes over time in estimated degree class premia. Using a variety of complementary datasets for individuals born in Britain around 1970 and aged between 30 and 40, we estimate an hourly wage premium for a 'good' (relative to a 'lower') class of degree of 7% to 9%, implying a wide spread around the average graduate premium. We also estimate the premium for a good relative to a lower degree for different cohorts (those born between the mid-1960s and early-1980s) and find evidence that the premium for a good degree has risen over time as the proportions of cohorts participating in higher education have increased.

Suggested Citation

  • Robin Naylor & Jeremy Smith & Shqiponja Telhaj, 2015. "Graduate Returns, Degree Class Premia and Higher Education Expansion in the UK," CEP Discussion Papers dp1392, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp1392
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    References listed on IDEAS

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    Cited by:

    1. Stijn Baert & Dieter Verhaest, 2021. "Work Hard or Play Hard? Degree Class, Student Leadership and Employment Opportunities," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(4), pages 1024-1047, August.
    2. Kara, Elif & Tonin, Mirco & Vlassopoulos, Michael, 2021. "Class size effects in higher education: Differences across STEM and non-STEM fields," Economics of Education Review, Elsevier, vol. 82(C).
    3. Richard Blundell & David A. Green & Wenchao (Michelle) Jin, 2016. "The UK wage premium puzzle: how did a large increase in university graduates leave the education premium unchanged?," IFS Working Papers W16/01, Institute for Fiscal Studies.
    4. Judith M. Delaney & Paul J. Devereux, 2020. "How Gender and Prior Disadvantage Predict Performance in College," The Economic and Social Review, Economic and Social Studies, vol. 51(2), pages 189-239.
    5. Oliver Anderson, 2022. "Walking the line: Does crossing a high stakes exam threshold matter for labour market outcomes?," CEPEO Working Paper Series 22-05, UCL Centre for Education Policy and Equalising Opportunities, revised Apr 2022.
    6. Jacek Liwiński & Emilia Bedyk, 2016. "Does it pay to invest in the education of children?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 47.
    7. George Agiomirgianakis & Theodore Lianos & Nicholas Tsounis, 2019. "Returns to Investment in Distance Learning: the Case of Greece," International Business Research, Canadian Center of Science and Education, vol. 12(3), pages 94-100, March.
    8. Benny, Liza & Bhalotra, Sonia & Fernández, Manuel, 2021. "Occupation flexibility and the graduate gender wage gap in the UK," ISER Working Paper Series 2021-05, Institute for Social and Economic Research.
    9. Minaya, Veronica & Agasisti, Tommaso & Bratti, Massimiliano, 2022. "When need meets merit: The effect of increasing merit requirements in need-based student aid," European Economic Review, Elsevier, vol. 146(C).
    10. Oliver Anderson, 2023. "Walking the line: Does crossing a high-stakes exam threshold matter for labor market outcomes?," French Stata Users' Group Meetings 2023 01, Stata Users Group.
    11. Atay, Salim & Asik, Gunes A. & Tumen, Semih, 2023. "Impact of Graduating with Honors on Entry Wages of Economics Majors," IZA Discussion Papers 16080, Institute of Labor Economics (IZA).
    12. Del Bono, Emilia & Fumagalli, Laura & Holford, Angus & Rabe, Birgitta, 2022. "University access: the role of background and COVID-19 throughout the application process," ISER Working Paper Series 2022-07, Institute for Social and Economic Research.
    13. Huang, Bin & Xu, Lei & Zhu, Yu, 2019. "Does the higher education expansion in the UK reduce the returns to education? A comparison of returning-from-work versus fresh out-of-school graduates," Economic Modelling, Elsevier, vol. 79(C), pages 276-285.
    14. Emilia Bedyk & Jacek Liwiński, 2016. "The wage premium from parents’ investments in the education of their children in Poland," Working Papers 2016-14, Faculty of Economic Sciences, University of Warsaw.

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    More about this item

    Keywords

    Graduate returns; higher education participation; ability composition;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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