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The College Wage Premium, Overeducation, and the Expansion of Higher Education in the UK

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Author Info

  • Walker, Ian

    () (Lancaster University)

  • Zhu, Yu

    () (University of Kent)

Abstract

This paper provides findings from the UK Labour Force Surveys from 1996 to 2003 on the financial private returns to a degree – the "college premium". The data covers a decade when the university participation rate doubled – yet we find no significant evidence that the mean return to a degree dropped in response to this large increase in the flow of graduates. However, we do find quite large falls in returns when we compare the cohorts that went to university before and after the recent rapid expansion of HE. The evidence is consistent with the notion that new graduates are a close substitute for recent graduates but poor substitutes for older graduates. There appears to have been a very recent increase in the number of graduates getting "non-graduate" jobs but, conditional on getting a graduate job the returns seem stable. Our results are consistent across almost all degree subjects – the exception being maths and engineering where we find that for men, and especially for women, there is a large increase in the proportion with maths and engineering degrees getting graduate jobs and that, conditional on this, the return is rising.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1627.

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Length: 32 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1627

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Related research

Keywords: human capital; higher education; college premium;

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References

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  1. Chevalier, Arnaud & Harmon, Colm & Walker, Ian & Zhu, Yu, 2003. "Does Education Raise Productivity or Just Reflect It?," CEPR Discussion Papers 3993, C.E.P.R. Discussion Papers.
  2. Steven McIntosh, 2004. "Further Analysis of the Returns to Academic and Vocational Qualifications," CEE Discussion Papers 0035, Centre for the Economics of Education, LSE.
  3. David Card & Thomas Lemieux, 2000. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," NBER Working Papers 7655, National Bureau of Economic Research, Inc.
  4. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics, Finance and Accounting Department Working Paper Series n540195, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
  5. McGuinness, Seamus & Bennett, Jessica, 2007. "Overeducation in the graduate labour market: A quantile regression approach," Economics of Education Review, Elsevier, vol. 26(5), pages 521-531, October.
  6. O'Leary, Nigel C. & Sloane, Peter J., 2005. "The Changing Wage Return to an Undergraduate Education," IZA Discussion Papers 1549, Institute for the Study of Labor (IZA).
  7. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2003. "Evaluating the impact of education on earnings in the UK: Models, methods and results from the NCDS," IFS Working Papers W03/20, Institute for Fiscal Studies.
  8. Dearden, Lorraine, et al, 2002. "The Returns to Academic and Vocational Qualifications in Britain," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 249-74, July.
  9. Sloane, Peter J. & O'Leary, Nigel C., 2004. "The Return to a University Education in Great Britain," IZA Discussion Papers 1199, Institute for the Study of Labor (IZA).
  10. Harmon, C & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
  11. A Gosling & Stephen Machin, 1995. "The Changing Distribution of Male Wages in the UK," CEP Discussion Papers dp0271, Centre for Economic Performance, LSE.
  12. David Greenaway & Michelle Haynes, 2003. "Funding Higher Education in The UK: The Role of Fees and Loans," Economic Journal, Royal Economic Society, vol. 113(485), pages F150-F166, February.
  13. Taber, Christopher R, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," Review of Economic Studies, Wiley Blackwell, vol. 68(3), pages 665-91, July.
  14. Edwin Leuven & Barbara Sianesi, 2003. "PSMATCH2: Stata module to perform full Mahalanobis and propensity score matching, common support graphing, and covariate imbalance testing," Statistical Software Components S432001, Boston College Department of Economics, revised 19 Jul 2012.
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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Is the graduate premium falling?
    by chris dillow in Stumbling and Mumbling on 2009-01-28 14:23:06
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Grazier, Suzanne & O'Leary, Nigel C. & Sloane, Peter J., 2008. "Graduate Employment in the UK: An Application of the Gottschalk-Hansen Model," IZA Discussion Papers 3618, Institute for the Study of Labor (IZA).
  2. Francis Green & Yu Zhu, 2008. "Overqualification, Job Dissatisfaction, and Increasing Dispersion in the Returns to Graduate Education," Studies in Economics 0803, Department of Economics, University of Kent.
  3. Stephen Machin & Anna Vignoles, 2006. "Education Policy in the UK," CEE Discussion Papers 0057, Centre for the Economics of Education, LSE.
  4. repec:ese:iserwp:2007-18 is not listed on IDEAS
  5. Gebel, Michael & Pfeiffer, Friedhelm, 2007. "Educational expansion and its heterogeneous returns for wage workers," ZEW Discussion Papers 07-010, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  6. Heshmati, Almas, 2007. "Labor Market Policy Options of the Kurdistan Regional Government," IZA Discussion Papers 3247, Institute for the Study of Labor (IZA).
  7. Charley Greenwood & Andrew Jenkins & Anna Vignoles, 2007. "The Returns to Qualifications in England: Updating the Evidence Base on Level 2 and Level 3 Vocational Qualifications," CEE Discussion Papers 0089, Centre for the Economics of Education, LSE.

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