This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.Find out more here

GET INVOLVED

To discuss how you and your organisation can get more involved with The Work Foundation, please contact us.

Call 020 7976 3575 or email info@theworkfoundation.com

Lancaster University Management School

The earnings from learning: economists weigh up the relative returns from undergraduate degrees

Authors: Lancaster University Management School Lancaster University Management School

16 August 2013

Going to university represents a significant investment – and one that is only likely to increase in significance with impending tuition fees rises. So should prospective students be thinking more pragmatically – taking a long, hard look at what they study in terms of how it can enhance their earnings over their lifetime? Are some degree subjects more lucrative over the long term than others, in terms of what graduates can expect back?

The answer to that last question would most definitely seem to be yes, according to recent research Professor Ian Walker of Lancaster’s Department of Economics and Dr Yu Zhu of the University of Kent.

Using UK Labour Force Survey data from 1994 to 2009, Walker and Zhu have modelled how HE qualifications affect the earnings of graduates in the UK, according to the type of subject studied. This builds on earlier work they did to assess whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates, was driving down graduate wages – which they found not to be the case.

As Walker explains, their calculations went further than any previous studies, modelling the student loans system and factoring in the cost of repayments:

‘The conventional literature really just stops at examining what the impact of a degree is on gross earnings. We went several steps further: applying the appropriate arithmetic to get the net impact over your lifetime. From the model we were able to predict what a lifetime of earnings would look like for different sorts of graduates. We applied the tax system to it, and the loan repayments system, to work out how much money you had to spend each year of your working life.’

They compared their graduate sample with a set of individuals who did not do a degree but whose school qualifications would, in principle, have enabled them to go to university – typically two or more A-levels.

Degree subjects were divided into four major groupings, mirroring those used in the Labour Force Survey: science (including health-related degrees), technology, engineering and mathematics (STEM); law, economics and management (LEM); arts, humanities and other social sciences (OSSAH); and combined degrees (COMB).

‘If you think of higher education purely as an investment,’ says Walker, ‘our prior was that the rate of return across these different investments – ie different subjects – would be broadly similar. If markets are efficient you shouldn’t see significant differentials across similar kinds of “assets”. While human capital is presumably less malleable than financial capital, we nevertheless thought that people would broadly be making sensible choices and that we would not be seeing big differentials.’


Differences in lifecycle

Yet the picture that emerged was far more complex. Earnings levels did differ markedly between different subject groupings, and these differentials varied by age for both men and women.

‘The differences in age-earnings profiles are complicated,’ says Walker. ‘They do not appear to be parallel, which is what the literature typically assumes. Male LEM graduates, for example, enjoy faster growth in wages early in the lifecycle compared to other majors, including STEM.’

This is true, he adds, even for those with poor degrees. The model showed that STEM graduates, or those with combined degrees, would eventually catch up with those who did LEM but not till much later in the lifecycle. So early-career wage levels are not a good predictor of lifetime earnings – something the government is assuming in using first destination earnings data.

For those opting for arts or social science degrees, the lifetime returns are markedly lower – especially for men. In fact, on average male non-graduates did better than men with arts degrees: the findings suggest there is actually a small negative financial return from doing this type of degree.

For women, the picture was significantly different. Once again LEM graduates saw the highest and fastest rate of return. But women who did a degree – irrespective of which subject they chose – enjoyed substantially higher lifetime earnings than those who did not. What this indicates, says Walker, is the level of discrimination female non-graduates still face in the labour market.


Implications

For Walker the results raise some interesting questions about which subjects are currently seen as priority areas.

‘We were particularly interested in capturing what was going on with STEM graduates because we knew that the government felt this to be somehow different from other subjects. We were keen to see whether the rate of return to investing in a STEM degree really was bigger than to other subjects, which might conceivably justify subsidising STEM relative to other subjects. If the rate of return is high, that might be an indication that there are too few students studying those subjects and so provide grounds for a subsidy.

‘If so, we’d expect to see a big differential in the rate of return to STEM graduates relative to non-STEM graduates. What our results show is that’s actually not true. So we don’t see a big argument for subsidising STEM from the point of view of market failure. This particular argument doesn’t seem to hold water.’


Effects on choice

So will all this affect what students actually choose, when it comes to the crunch? For some perhaps yes, but in general Walker thinks not – because young people, he argues, tend to take a fairly short-term view, attaching more weight to current experience than to more distant events.

‘Young people are typically very impatient: they want to have things now, and they don’t really care very much how they pay for it in the future. This suggests that subjects that are easy are more likely to be taken by students who discount the future heavily. They’d rather have the fun now and pay for it, in terms of lower wages, in the future.’

Even the current reforms of the UK fees system will not, he believes, have a huge impact on the economic returns to be expected from degrees.

‘The strong message that comes out of this research is that even a large rise in tuition fees makes relatively 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.’

Differences by degree: evidence of the net financial rates of return to undergraduate study for England and Wales by Ian Walker and Yu Zhu is due to be published in a forthcoming issue of the Economics of Education Review.

Comments in Chronological Order (Total 89 Comments)

sadsa

25 Jun 2014 10:32AM

No matter what medicine or food supplement you are taking, following the proper way of taking it is very important. Dosage is recommended by food and drug manufacturers in order for the product to produce the optimum results. Not following any recommended dosage can be a great risk, as well as, a waste of time, money, and effort. Margarita Shelton

sadsa

25 Jun 2014 12:28PM

Various diet supplements are available online but the Garcinia Cambogia is fast becoming the best-selling one among people on a mission to have a healthier weight. The bad news is that there are now so many brands of Garcinia Cambogia products that it can be hard to pick the best one. How can you pick the one that is really effective? Doreen Larson

Aqib

29 Jun 2014 2:19AM

It’s always so sweet and also full of a lot of fun for me personally and my office colleagues to search your blog a minimum of thrice in a week to see the new guidance you have got find her on linkedin
heroes of the storm beta key

Hero1

29 Jun 2014 8:11PM

I thought it was going to be some boring old post, but it really compensated for my time. I will post a link to this page on my blog. I am sure my visitors will locate that extremely useful...
Video Production Sydney

Her

30 Jun 2014 12:17AM

You may post on the customer service for the blog. You could advertise it's tremendous. Your blog advice might expand your readers. purchase here

amd

15 Jul 2014 10:05PM

Excellent post, went ahead and bookmarked your site. I can’t wait to read more from you.
Phone Charging Stations For Events

Blogger Books

16 Jul 2014 8:19AM

Your style is very unique in comparison to other folks I've read stuff from. Many thanks for posting when you have the opportunity, Guess I'll just book mark this page. #I Like

amd

16 Jul 2014 9:51PM

This is a great article, Thanks for giving me this information. Keep posting.
Browser home page

amd

17 Jul 2014 1:03PM

I read this article. I think You put a lot of effort to create this article. I appreciate your work.
Comic Memorabilia

Hello,I love reading through your blog, I wanted to leave a little comment to support you and wish you a good continuation.

amd

22 Jul 2014 2:15PM

I simply want to tell you that I am new to weblog and definitely liked this blog site. Very likely I’m going to bookmark your blog . You absolutely have wonderful stories. Cheers for sharing with us your blog.
udemy coupon

amd

22 Jul 2014 11:19PM

Excellent post, went ahead and bookmarked your site. I can’t wait to read more from you.
how to become a dj

amd

23 Jul 2014 2:17PM

What a great blog, thank you for letting me comment on it.
http://ranktop10seo.com/

Klara B

24 Jul 2014 11:39PM

When I originally commented I clicked the -Notify me when new comments are added- checkbox and now each time a comment is added I get four emails with the same comment. Is there any way you can remove me from that service? Thanks!
make your owm iphone case

John Lee

24 Jul 2014 11:46PM

Youre so cool! I dont suppose Ive read anything like this before. So nice to find somebody with some original thoughts on this subject. realy thank you for starting this up. this website is something that is needed on the web, someone with a little originality. useful job for bringing something new to the internet!
If you want
article spinner see the page.

ahmed

30 Jul 2014 4:50PM

Effortlessly, the article is really the best point on this registry related issue. I fit in with your decisions and will energetically anticipate your next overhauls. deck installations colleyville tx

amd

30 Jul 2014 10:08PM

Fabulous post, felt free to bookmarked your site. I can hardly wait to peruse more from you.
cheap web hosting

amd

31 Jul 2014 12:07PM

Fabulous post, felt free to bookmarked your site. I can hardly wait to peruse more from you.
game tester jobs

jackle

31 Jul 2014 12:53PM

I was recently looking for a Hostgator coupon 2014 and I found that http://hostgatorcouponplace.com/ had some great hostgator coupons 2014 so if anybody needs up to 50% off discount on hostgator you can use the hostgator coupon 2014 from HostgatorCouponPlace.com

amd

31 Jul 2014 5:14PM

Extraordinary, This particular net page is genuinely exciting and delight to learn. I'm a colossal fan from the subjects specified.
home security systems by simplisafe

jackle

01 Aug 2014 12:27PM

If anybody wants to start a website the best way to save on Hosting is by choosing Hostgator and their high web hosting discounts available with the use of Hostgator coupons 2014. The best Hostgator coupon 2014 can be found here: http://www.bloggerpunch.com/2014/07/new-hostgator-coupon-2014-on.html

Luka

04 Aug 2014 11:35AM

If you looking for how to download candy crash saga game, here you can find the right download, check
Get The Candy Crush Saga Game Download

abc

07 Aug 2014 11:29AM

I was extremely satisfied to discover this site.i needed to thank you for this extraordinary read!! I doubtlessly getting a charge out of every last bit of it and I have you bookmarked to look at new stuff you post.
FotoDarek

zee

07 Aug 2014 1:45PM

This is a superb post I seen because of offer it. It is truly what I needed to see trust in future you will proceed for imparting such a magnificent post.
politics

milo

07 Aug 2014 3:14PM

I read this article. I think You put a great deal of exertion to make this article. I like your work.
franchisesocialmarketing

sadsa

08 Aug 2014 7:43AM

We pride ourselves on being ahead of the current market place, developing original concepts, ideas and designs to create beautiful and individual Loft Conversions, Garden Rooms, Property Extensions and Garage Conversions for you to enjoy. Loft conversions Hertfordshire

dada

09 Aug 2014 9:56PM

Should there be an alternate enticing post you can impart next time, I'll be without a doubt sitting tight for it.
Murai Muneaki

Heaven

10 Aug 2014 7:57AM

wow! what a nice blog...i really appreciate this. i found the required information. thanks.
Boom Beach Hack

amd

10 Aug 2014 4:19PM

You have raised a paramount issue..thanks for sharing..i might want to peruse more present issues from this blog..keep posting..
pos software

john

11 Aug 2014 1:31PM

I don't have sufficient energy right now to completely read your site but I have bookmarked it and likewise include your RSS channels. I will be back in a day or two. much obliged concerning an incredible site.
Lombardcomputerrepair.com

amd

21 Aug 2014 12:52PM

Much appreciated a whole lot for this extraordinary article;this is the stuff that keeps me experiencing out these day.
boxing news

amd

31 Aug 2014 11:30PM

Incredible post! I am really getting prepared to over this data, is extremely useful my companion. Likewise extraordinary blog here with the greater part of the important data you have. Keep doing awesome doing here.
http://tarocchionline24.com/

luther

05 Sep 2014 11:21AM

The internet is bogged down with bogus blogs with no real message but the post was fantastic and well worth the read.Thank you for sharing this with me. website

jackle

08 Sep 2014 11:44PM

I simply want to tell you that I am new to weblog and definitely liked this blog site. Very likely I’m going to bookmark your blog . You absolutely have wonderful stories. Cheers for sharing with us your blog.
newandusednissangtrsportcarsforsale

amd

11 Sep 2014 1:13AM

You have a real ability for writing unique content. I like how you think and the way you represent your views in this article. I agree with your way of thinking. Thank you for sharing. - See more at:
Kuponi Kole.ktiva.si

Michael Johnson

11 Sep 2014 8:18PM

Solid post, I really enjoyed your writings and think I'll definitely return for some more. It's some pretty intriguing stuff. I am enthralled that I was able to stumble across this today, as it made my day and provided some interesting information. I'll bookmark this for future reference.
plumber brevard county

Gregory Vargas

11 Sep 2014 8:27PM

Quality material here, this is a professional and nicely done post - WOW! I'm impressed with your website layout as well, as it's one of the nicer ones I've came across while searching the web. I'll pass this along to my coeds, they will absolutely love this piece. window tinting vero beach fl

Diego V

12 Sep 2014 12:43AM

I was brought here by one of my peers, and I have to say it was a good decision to visit your site today. I learned a lot and can chalk this down as the "beneficial" category regarding this post. I'll save this is my favorites and be sure to check back and lookout for more of your wonderful posts. melbourne bariatric surgery

Mark Lew

12 Sep 2014 6:07PM

Great information here. I stumbled across this on the web and I'm pretty excited that I did, since it answered my question and then some. Good material, great post, and tremendous content. Do you update this quite often? https://www.youtube.com/user/tline1902

Political Food For Thought

15 Sep 2014 8:18PM

Really good stuff here, I'm really impressed with the plethora and amount of information you've shared here. Do you blog yourself, or do you outsource this material?
Political Food For Thought

Alberta

17 Sep 2014 5:37AM

Thanks so much for sharing awesome info! I am looking forward to see more posts by you! http://bit.ly/1DhCJ0f

jackle

17 Sep 2014 2:08PM

Excellent post, went ahead and bookmarked your site. I can’t wait to read more from you.
Sun City Electrician

jackle

18 Sep 2014 6:14PM

I've recently chosen to make a site, which I have been needing to accomplish for some time. A debt of gratitude is in order regarding this post, its truly valuable!
2015 Winter sales dates

josephlan

23 Sep 2014 10:24AM

If you are searching for the best online gambling casino, refer the reviews, ratings, feed backs, you can also seek help of blogs and forums

jack

23 Sep 2014 7:00PM

Certainly a fantastic piece of work ... It has relevant information. Thanks for posting this. Your blog is so interesting and very informative.Thanks sharing. Definitely a great piece of work Thanks for your work. - See more at:
http://www.busparis.pl

jack

30 Sep 2014 1:26PM

I discovered this housing web page, OC Housing News. I stumbled upon a post, The housing market is crazy!. This news post is better than most. The housing news and real estate analysis on the site is super, the cartoons and writing are entertaining and insightful, and the real estate educational materials are fantastic. I advise discovering this Internet site to tour what it has to offer.
Real Estate Market News

klasemen

02 Oct 2014 1:48PM


I like this idea. I went by your site shockingly and simply been your fan. Continue posting as I am gonna come to peruse it regular.. klasemen

www.robotvacuumreviewshq.com

02 Oct 2014 6:01PM

Presently I realize that I was right.thanks for the data you post. you put truly supportive data. www.robotvacuumreviewshq.com

jack

11 Oct 2014 1:43PM

I was extremely satisfied to discover this site.i needed to thank you for this extraordinary read!! I doubtlessly getting a charge out of every last bit of it and I have you bookmarked to look at new stuff you post.
family counseling services

jack

11 Oct 2014 2:52PM

I just thought it may be an idea to post incase anyone else was having problems researching but I am a little unsure if I am allowed to put names and addresses on here.
yunnan tours

SEO Malaysia

12 Oct 2014 3:42PM

I see the superlative substance on your sites and searching forward for more posts. SEO Malaysia

jack

13 Oct 2014 5:55AM

Thanks for writing such a good article, I stumbled onto your blog and read a few post. I like your style of writing...
Virtualese

jack

23 Oct 2014 12:40PM

Awesome material! Thanks a lot, dude, for giving this so good material to us. I've just recently completed one of my projects due to the information from this post. Thanks man, once again!
law essay writing service

jack

23 Oct 2014 1:03PM

You have a real ability for writing unique content. I like how you think and the way you represent your views in this article. I agree with your way of thinking. Thank you for sharing. - See more at:
law dissertation service

davidjohn

17 Nov 2014 10:50AM

That's very intriguing Smile I like reading in addition to We are always...debt consolidation

jackseo

24 Nov 2014 10:31AM

Trying to say much appreciated won't simply be sufficient, for the fantasti c clarity in your written work. I will right away get your rss channel to stay educated of any redesigns.
rspp livorno

jackseo

27 Nov 2014 4:35AM

Thanks for a very interesting blog. What else may I get that kind of info written in such a perfect approach? I’ve a undertaking that I am simply now operating on, and I have been at the look out for such info.
auto poetsen

jackseo

04 Dec 2014 2:32PM

Really great post. I simply unearthed your site and needed to say that I have truly appreciated perusing your blog entries. Any way I'll be subscribing to your food and I trust you post again soon.
Google Apps

BlackMen

06 Dec 2014 11:20AM

whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates, was driving down graduate wages – which they found not to be the case.kavitaatiolaite

PDF Links.thirtythree

06 Dec 2014 11:26AM

driving down graduate wages – which they found not to be the case..

jackseo

06 Dec 2014 11:50AM

I likewise profit from taking in the appraisals, however discover that alot of individuals should stay on article to attempt and include worth toward the real weblog discharge.
Instaforex

Jack Eskin

06 Dec 2014 1:03PM

This builds on earlier work they did to assess whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates, was driving down graduate wages – which they found not to be the case.mittekirurgiline rasvaimu

jackseo

06 Dec 2014 3:07PM

it's really nice and meanful. it's really cool blog. Linking is very useful thing.you have really helped lots of people who visit blog and provide them usefull information.
resources about foreclosure

imranasd

16 Dec 2014 8:39PM

alls du keine eigene Webseite hast kannst du trotzdem Geld verdienen
im Internet, wobei der Gewinn nicht so hoch ausfallen wird. Denn auf einer
Website verdienst du mit deinen Besuchern, sie "arbeiten" also für dich. BLOG COMMNTING AND LOGO DESIGN SERVICE

storage units for sale

17 Dec 2014 11:28AM

whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates

Agen Judi Sbobetonline

18 Dec 2014 1:09PM

This is my first time i visit here. I found so many entertaining stuff in your blog, especially its discussion. From the tons of comments on your articles,

Muneer

18 Dec 2014 8:29PM

Thank you for sharing this wonderful post. I would like to know more about this artist. Thanks for the article.keep it up. Mega Polymers

Adam

19 Dec 2014 8:50AM

This article gives the light in which we can observe the reality.
This is very nice one and gives indepth information
Tattoo History

Nihal

20 Dec 2014 9:06AM

Hi, I just wanted to come here and tell you about how I came across this post and I totally love this post.
mens biker leather jackets

home remodel loans

20 Dec 2014 9:47AM

overwhelming reputational challenges currently facing the banking and finance sector.

van hire london

20 Dec 2014 11:57AM

whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates, was driving down graduate wages – which they found not to be the case.van hire london

touch screen mobile

21 Dec 2014 10:05AM

whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates,

fotografo de bodas en valencia

21 Dec 2014 10:07AM

I learned a lot and can chalk this down as the "beneficial" category regarding this post. fotografo de bodas en valencia

madbussen

21 Dec 2014 1:21PM

This builds on earlier work they did to assess whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates, was driving down graduate wages – which they found not to be the case.madbussen

calculations went further than any previous studies, modelling the student loans system and factoring in the cost of repayments: https://www.rebelmouse.com/manifestationmiraclereviews/

vitamin c serum

21 Dec 2014 1:54PM

uent increased supply of graduates, was driving down graduate wages – which they found not to be the case vitamin c serum

My page

21 Dec 2014 5:31PM

Great site having straight answers precisely what satisfied to have perused a considerable measure of them for your site. My page

Cavy

21 Dec 2014 5:56PM

We went several steps further: applying the appropriate arithmetic to get the net impact over your lifetime. custom embroidery for polo shirts & T shirts

Vert Shock Workouts

22 Dec 2014 7:58AM

The only thing I can say with complete confidence is that anyone who tells you weight loss is simple and anyone can do it is (A) lying, (B) misinformed, (C) trying to sell you something, or (D) all of the above.Vert Shock Workouts

globalferi.com

22 Dec 2014 8:42AM

As Walker explains, their calculations went further than any previous studies, modelling the student loans system and factoring in the cost of repayments: globalferi.com

globalferi.com

22 Dec 2014 9:10AM

whether the rapid expansion of higher education in the late ‘80s, and subsequent increased supply of graduates, was driving down graduate wages – which they found not to be the case.globalferi.com

pariyah

22 Dec 2014 9:33AM

this is my first visit to your blog! I am confident they will be benefited from this site. But you have done a great job. I will definitely dig it and personally recommend to my friends.Larnaca Airport Transfers

Bollywood Movies

22 Dec 2014 9:52AM

degree subjects more lucrative over the long term than others, in terms of what graduates can expect back? Bollywood Movies

website here

23 Dec 2014 7:23AM

I am always searching online for articles that can help me. There is obviously a lot to know about this. I think you made some good points in Features also. Keep working, great job!

nj new homes

23 Dec 2014 8:26AM

But obviously my film is about Sita and her suffering,” Paley said. “And that’s that not something they really want.

5 star escort services

15 Jan 2015 12:40PM


In actual fact loaded content and awfully positive information. I got it my way out from over here. 5 star escort services

find out

15 Jan 2015 3:31PM

This is more informative than other media, I really like following your blog as the articles are so simple to read find out

Srujan

02 Jul 2015 4:38PM

hello sir,

Very informative blog. I'm very happy that I have found your article. I definitely read more here. Thanks!
regards

Srujan

02 Jul 2015 4:39PM

hello sir,

Very informative blog. I'm very happy that I have found your article. I definitely read more here. Thanks!
regards