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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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  • Walker, Ian
  • Zhu, Yu

Abstract

This paper provides estimates of the impact of higher education qualifications on the earnings of graduates in the U.K. by subject studied. We use data from the recent U.K. 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. 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.

Suggested Citation

  • Walker, Ian & Zhu, Yu, 2011. "Differences by degree: Evidence of the net financial rates of return to undergraduate study for England and Wales," Economics of Education Review, Elsevier, vol. 30(6), pages 1177-1186.
  • Handle: RePEc:eee:ecoedu:v:30:y:2011:i:6:p:1177-1186
    DOI: 10.1016/j.econedurev.2011.01.002
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    References listed on IDEAS

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    1. Ian Walker & Yu Zhu, 2008. "The College Wage Premium and the Expansion of Higher Education in the UK," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 695-709, December.
    2. Edwin Leuven & Hessel Oosterbeek & Bas van der Klaauw, 2010. "The Effect of Financial Rewards on Students' Achievement: Evidence from a Randomized Experiment," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1243-1265, December.
    3. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2008. "Earnings Functions and Rates of Return," Journal of Human Capital, University of Chicago Press, vol. 2(1), pages 1-31.
    4. Montmarquette, Claude & Cannings, Kathy & Mahseredjian, Sophie, 2002. "How do young people choose college majors?," Economics of Education Review, Elsevier, vol. 21(6), pages 543-556, December.
    5. 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.
    6. Hussain, Iftikhar & McNally, Sandra & Telhaj, Shqiponja, 2009. "University Quality and Graduate Wages in the UK," IZA Discussion Papers 4043, Institute for the Study of Labor (IZA).
    7. Arcidiacono, Peter & Hotz, V. Joseph & Kang, Songman, 2012. "Modeling college major choices using elicited measures of expectations and counterfactuals," Journal of Econometrics, Elsevier, vol. 166(1), pages 3-16.
    8. Caroline M. Hoxby, 2009. "The Changing Selectivity of American Colleges," Journal of Economic Perspectives, American Economic Association, vol. 23(4), pages 95-118, Fall.
    9. Richard Blundell & Lorraine Dearden & Barbara Sianesi, 2005. "Evaluating the effect of education on earnings: models, methods and results from the National Child Development Survey," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 473-512.
    10. 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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    12. Montmarquette, Claude & Mahseredjian, Sophie & Houle, Rachel, 2001. "The determinants of university dropouts: a bivariate probability model with sample selection," Economics of Education Review, Elsevier, vol. 20(5), pages 475-484, October.
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    Keywords

    Rate of return; College premium;

    JEL classification:

    • I - Health, Education, and Welfare
    • I - Health, Education, and Welfare

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