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Differences by Degree: Evidence of the Net Financial Rates of Return to Undergraduate Study for England and Wales

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Author Info

  • Walker, Ian

    ()
    (Lancaster University)

  • Zhu, Yu

    ()
    (University of Kent)

Abstract

This paper provides estimates of the impact of higher education qualifications on the earnings of graduates in the UK by subject studied. We use data from the recent UK Labour Force Surveys which provide a sufficiently large sample to consider the effects of the subject studied, class of first degree, and postgraduate qualifications. Ordinary Least Squares estimates show high average returns for women that does not differ by subject. For men, we find very large returns for Law, Economics and Management but not for other subjects. Quantile Regression estimates suggest negative returns for some subjects at the bottom of the distribution, or even at the median in Other Social Sciences, Arts and Humanities for men. Degree class has large effects in all subjects suggesting the possibility of large returns to effort. Postgraduate study has large effects, independently of first degree class. A large rise in tuition fees across all subjects has only a modest impact on relative rates of return suggesting that little substitution across subjects would occur. The strong message that comes out of this research is that even a large rise in tuition fees makes little difference to the quality of the investment – those subjects that offer high returns (LEM for men, and all subjects for women) continue to do so. And those subjects that do not (especially OSSAH for men) will continue to offer poor returns. The effect of fee rises is dwarfed by existing cross subject differences in returns.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5254.

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Length: 28 pages
Date of creation: Oct 2010
Date of revision:
Publication status: published in: Economics of Education Review, 2011, 30 (6), 1177-1186
Handle: RePEc:iza:izadps:dp5254

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Keywords: college premium; rate of return;

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References

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  1. Iftikhar Hussain & Sandra McNally & Shqiponja Telhaj, 2009. "University Quality and Graduate Wages in the UK," CEE Discussion Papers 0099, Centre for the Economics of Education, LSE.
  2. MONTMARQUETTE, Claude & CANNINGS, Kathy & MAHSEREDJIAN, Sophie, 1997. "How do Young People Choose College Majors?," Cahiers de recherche 9719, Universite de Montreal, Departement de sciences economiques.
  3. Nigel C. O’Leary & Peter J. Sloane, 2005. "The Return to a University Education in Great Britain," National Institute Economic Review, National Institute of Economic and Social Research, vol. 193(1), pages 75-89, July.
  4. Eide, Eric & Brewer, Dominic J. & Ehrenberg, Ronald G., 1998. "Does it pay to attend an elite private college? Evidence on the effects of undergraduate college quality on graduate school attendance," Economics of Education Review, Elsevier, vol. 17(4), pages 371-376, October.
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  1. Gove vs Cowell: an old dilemma
    by chris dillow in Stumbling and Mumbling on 2013-11-16 11:05:30
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Cited by:
  1. Jo Blanden & Lindsey Macmillan, 2014. "Education and Intergenerational Mobility: Help or Hindrance?," DoQSS Working Papers 14-01, Department of Quantitative Social Science - Institute of Education, University of London.
  2. Javier Valbuena, 2012. "A Longitudinal Perspective on Higher Education Participation in the UK," Studies in Economics 1215, Department of Economics, University of Kent.
  3. MORIKAWA Masayuki, 2013. "Postgraduate Education, Labor Participation, and Wages: An empirical analysis using micro data from Japan," Discussion papers 13065, Research Institute of Economy, Trade and Industry (RIETI).
  4. Lindsey Macmillan & Claire Tyler & Anna Vignoles, 2013. "Who gets the Top Jobs? The role of family background and networks in recent graduates' access to high status professions," DoQSS Working Papers 13-15, Department of Quantitative Social Science - Institute of Education, University of London.
  5. MORIKAWA Masayuki, 2012. "Postgraduate Education and Human Capital Productivity in Japan," Discussion papers 12009, Research Institute of Economy, Trade and Industry (RIETI).
  6. Lindley, Joanne, 2012. "The gender dimension of technical change and the role of task inputs," Labour Economics, Elsevier, vol. 19(4), pages 516-526.

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