IDEAS home Printed from https://ideas.repec.org/p/ucd/wpaper/200720.html
   My bibliography  Save this paper

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

Author

Listed:
  • Ian Walker

    (University of Warwick and the Institute for Fiscal Studies)

  • Yu Zhu

    (University of Kent and Centre for the Economics of Education)

Abstract

This paper provides findings from the UK Labour Force Surveys from 1993 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, 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.

Suggested Citation

  • Ian Walker & Yu Zhu, 2007. "The College Wage Premium, Overeducation, and the Expansion of Higher Education in the UK by and," Working Papers 200720, Geary Institute, University College Dublin.
    • Handle: RePEc:ucd:wpaper:200720
    as

    Download full text from publisher

    File URL: http://www.ucd.ie/geary/static/publications/workingpapers/GearyWp200720.pdf
    File Function: 3.01, 2007
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Steven Mcintosh, 2006. "Further Analysis of the Returns to Academic and Vocational Qualifications," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(2), pages 225-251, April.
    2. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 705-746.
    3. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2004. "Does Education Raise Productivity, or Just Reflect it?," Economic Journal, Royal Economic Society, vol. 114(499), pages 499-517, November.
    4. Colm Harmon; & Ian Walker, 1995. "Estimates of Economic Return to Schooling in the UK," Economics Department Working Paper Series n540195, Department of Economics, National University of Ireland - Maynooth.
    5. 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.
    6. Dearden, Lorraine, et al, 2002. "The Returns to Academic and Vocational Qualifications in Britain," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 249-274, July.
    7. O'Leary, Nigel C. & Sloane, Peter J., 2005. "The Return to a University Education in Great Britain," National Institute Economic Review, National Institute of Economic and Social Research, vol. 193, pages 75-89, July.
    8. Christopher R. Taber, 2001. "The Rising College Premium in the Eighties: Return to College or Return to Unobserved Ability?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(3), pages 665-691.
    9. Amanda Gosling & Stephen Machin & Costas Meghir, 2000. "The Changing Distribution of Male Wages in the U.K," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 67(4), pages 635-666.
    10. 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 01 Feb 2018.
    11. Barbara Sianesi, 2001. "Propensity score matching," United Kingdom Stata Users' Group Meetings 2001 12, Stata Users Group, revised 23 Aug 2001.
    12. 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.
    13. O'Leary, Nigel C. & Sloane, Peter J., 2005. "The Changing Wage Return to an Undergraduate Education," IZA Discussion Papers 1549, Institute of Labor Economics (IZA).
    14. Harmon, Harmon & Ian Walker, 1995. "Estimates of the economic return to schooling for the UK," IFS Working Papers W95/12, Institute for Fiscal Studies.
    15. 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 150-166, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hermannsson, Kristinn & Lisenkova, Katerina & Lecca, Patrizio & McGregor, Peter G & Swales, J Kim, 2010. "The Importance of Graduates for the Scottish Economy: A Micro-to-Macro Approach," SIRE Discussion Papers 2010-80, Scottish Institute for Research in Economics (SIRE).
    2. Francis Green & Yu Zhu, 2010. "Overqualification, job dissatisfaction, and increasing dispersion in the returns to graduate education," Oxford Economic Papers, Oxford University Press, vol. 62(4), pages 740-763, October.
    3. Pamela Lenton, 2012. "Over-education across British Regions," Regional Studies, Taylor & Francis Journals, vol. 46(9), pages 1121-1135, October.
    4. Pamela Lenton, 2011. "Part time employment and happiness: A cross-country analysis," Working Papers 2011001, The University of Sheffield, Department of Economics, revised Jan 2011.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Walker, Ian & Zhu, Yu, 2005. "The College Wage Premium, Overeducation, and the Expansion of Higher Education in the UK," IZA Discussion Papers 1627, Institute of Labor Economics (IZA).
    2. 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.
    3. 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.
    4. Devereux, Paul J. & Fan, Wen, 2011. "Earnings returns to the British education expansion," Economics of Education Review, Elsevier, vol. 30(6), pages 1153-1166.
    5. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2003. "Dispersion in the economic return to schooling," Labour Economics, Elsevier, vol. 10(2), pages 205-214, April.
    6. Giorgio Brunello & Margherita Fort & Guglielmo Weber, 2009. "Changes in Compulsory Schooling, Education and the Distribution of Wages in Europe," Economic Journal, Royal Economic Society, vol. 119(536), pages 516-539, March.
    7. Erich Battistin & Barbara Sianesi, 2006. "Misreported schooling and returns to education: evidence from the UK," CeMMAP working papers CWP07/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    8. Steven McIntosh & Damon Morris, 2021. "Variation in the labour market rewards to vocational qualifications in the UK," Scottish Journal of Political Economy, Scottish Economic Society, vol. 68(5), pages 535-552, November.
    9. Lindley, Joanne & McIntosh, Steven, 2015. "Growth in within graduate wage inequality: The role of subjects, cognitive skill dispersion and occupational concentration," Labour Economics, Elsevier, vol. 37(C), pages 101-111.
    10. Dickson, Matt & Smith, Sarah, 2011. "What determines the return to education: An extra year or a hurdle cleared?," Economics of Education Review, Elsevier, vol. 30(6), pages 1167-1176.
    11. O'Leary, Nigel C. & Sloane, Peter J., 2005. "The Changing Wage Return to an Undergraduate Education," IZA Discussion Papers 1549, Institute of Labor Economics (IZA).
    12. Yee, Karol Mark Ramirez, 2023. "Raising the floor while lowering the ceiling: Reduced inequities in education returns in the Philippines," International Journal of Educational Development, Elsevier, vol. 101(C).
    13. Pedro Carneiro & Sokbae Lee, 2011. "Trends in Quality-Adjusted Skill Premia in the United States, 1960-2000," American Economic Review, American Economic Association, vol. 101(6), pages 2309-2349, October.
    14. Lorraine Dearden & Leslie McGranahan & Leslie McGranahan & Barbara Sianesi, 2004. "Returns to Education for the Marginal Learner: Evidence from the BCS70," CEE Discussion Papers 0045, Centre for the Economics of Education, LSE.
    15. Christian Belzil, 2008. "Testing the Specification of the Mincer Wage Equation," Annals of Economics and Statistics, GENES, issue 91-92, pages 427-451.
    16. Del Bono, Emilia & Galindo-Rueda, Fernando, 2006. "The long term impacts of compulsory schooling: evidence from a natural experiment in school leaving dates," ISER Working Paper Series 2006-44, Institute for Social and Economic Research.
    17. Battistin, Erich & De Nadai, Michele & Sianesi, Barbara, 2014. "Misreported schooling, multiple measures and returns to educational qualifications," Journal of Econometrics, Elsevier, vol. 181(2), pages 136-150.
    18. Wen Fan, 2012. "Estimating the Return to College in Britain Using Regression and Propensity Score Matching," LABOUR, CEIS, vol. 26(1), pages 31-45, March.
    19. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2004. "Does Education Raise Productivity, or Just Reflect it?," Economic Journal, Royal Economic Society, vol. 114(499), pages 499-517, November.
    20. Justin L. Tobias, 2003. "Are Returns to Schooling Concentrated Among the Most Able? A Semiparametric Analysis of the Ability–earnings Relationships," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(1), pages 1-29, February.

    More about this item

    Keywords

    human capital; higher education; college premium;
    All these keywords.

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucd:wpaper:200720. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Geary Tech (email available below). General contact details of provider: https://edirc.repec.org/data/geucdie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.