21 June 2014 ESPE 2014 Braga 1 Graduate returns, HE expansion and ability composition Based on joint work with Jeremy Smith and Shqiponja Telhaj Motivation • Policy (HE Fees regimes: Dearing, Browne) Variation by gender, subject, university, background, cohort, cohort characteristics (age-participation index, API) • Educational Returns: Returns to What? Years? Qualifications? Performance?
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Graduate returns, HE expansion and ability composition
Graduate returns, HE expansion and ability composition Based on joint work with Jeremy Smith and Shqiponja Telhaj Motivation Policy (HE Fees regimes: Dearing, Browne ) Variation by gender, subject, university, background, cohort, cohort characteristics (age-participation index, API) - PowerPoint PPT Presentation
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21 June 2014 ESPE 2014 Braga 1
Graduate returns, HE expansion and ability composition
Based on joint work with Jeremy Smith and Shqiponja Telhaj
1Eg, entering HE in 1993, graduating in 1996, 4yrs experience by 2000 when £ observed of 1970 birth cohort.
/dw ds
18% 30% 15 18
21 June 2014 ESPE 2014 Braga 12
Results 2: UK evidence on returns by degree class
Note RDD approach of Feng and Gaetz, LSE 2013:
Implied estimate of ca. 8% for ‘good’ over ‘lower’ degree
(Is that high or low…?)
Consider relative to College Wage Premium: BCS70 and LFS…
Mean (2-digit) SIC earnings, DLHE (6 months), 4 cohorts, ca500 students per cohort, 2005-10, matriculating 2002-07 (API stable at ca3 5% - similar to API for our 1998 HESA cohort).
21 June 2014 ESPE 2014 Braga 13
Results 2: UK evidence on returns by degree class (‘1970’ birth cohort) - Estimated log wage premia (BCS70)
(1) (2) (3) (4)
Wages observed in year: 2000 2000 2008 2008
Wages observed at age: 30 30 38 38
Good degree class premiumrelative to lower degree class
0.078(0.007)
0.073(0.012)
0.080(0.040)
0.069(0.074)
Lower degree class premiumrelative to 2+ A-levels
0.119(0.000)
0.106(0.000)
0.262(0.000)
0.223(0.000)
Ability and background controls No Yes No Yes
Other controls Yes Yes Yes Yes
No. of Obs 3046 3046 1856 1856
R2 0.081 0.103 0.141 0.170
Notes: p-values in parentheses. Ability controls include: BAS (verbal), BAS (numerical). Background controls include: parental income, parental social class, mother’s interest in education, father’s interest in education, mother’s education, father’s education. Other controls include: region (aged 10), gender, marital status and number of children, ethnicity.
21 June 2014 ESPE 2014 Braga 14
Results 2: UK evidence on returns by degree class (‘1970’ birth cohort) - Estimated log wage premia (LFS: 1969-71 births)
Notes: p-values in parentheses. Wages observed between 2005Q1 and 2012Q4 and have been deflated by the average earnings index. Other controls include: gender, marital status and number of children, ethnicity and tenure with current employer.
Wages observed at: 2005-2012
Wages observed at age: 36-41
Good degree class premium(relative to lower degree class)
0.087(0.001)
Lower degree class 0.188
(relative to 2+ A-levels) (0.000)
Other controls Yes
No. of Obs 2930
R2 0.152
21 June 2014 ESPE 2014 Braga 15
Results 2: UK evidence on returns by degree class
BCS70 and LFS have cell size limitations…
…so consider full student populations and administrative data…
21 June 2014 ESPE 2014 Braga 16
Results 2: UK evidence on returns by degree class (‘1970’ birth cohort) - Estimated log earnings premia (USR91: 1969-71 births)
Note: p-values in parentheses. Ability controls include: pre-University qualifications. Background controls include: social class of parents, school-type. Other controls include: gender, marital status, University attended and type of degree course.
Earnings observed at: 1992 1992
Earnings observed at age: 21-23 21-23
Good degree class premiumrelative to lower degree class
0.046(0.000)
0.043(0.000)
Ability and background controls No Yes
Other controls Yes Yes
No. of Obs. 22,459 22,459
R2 0.334 0.336
21 June 2014 ESPE 2014 Braga 17
Results 2: UK evidence on returns by degree class
The USR administrative data has two limitations:
• Graduate 4-digit occupations, rather than personal wages
• Graduate destinations after only 1 year.
So consider Graduate Cohort Surveys…
21 June 2014 ESPE 2014 Braga 18
Results 2: UK evidence on returns by degree class (‘1970’ birth cohort) - Estimated log wage premia (GCS1990: 1968-70 births)
Note: p-values in parentheses. Ability controls include pre-university qualifications, background controls include parental education, and other controls include age, gender, ethnicity, and marital status.
(1) (2) (3) (4)
Wages observed at: 1991 1991 1996 1996
Wages observed at age 21-23 21-23 26-28 26-28
Good degree class premiumrelative to lower degree class
0.051(0.014)
0.049(0.014)
0.084(0.014)
0.079(0.014)
Ability and background controls No Yes No Yes
Other controls Yes Yes Yes Yes
No. of Obs 2839 2839 3652 3652
R2 0.127 0.131 0.115 0.119
21 June 2014 ESPE 2014 Braga 19
Results 3: Evidence on Performance Premium across cohorts
21 June 2014 ESPE 2014 Braga 20
Results 3: UK evidence on returns by degree class (across cohorts)
Estimated log-wage good degree class premia (LFS) – selected birth and age cohorts. See notes to Table 2 for controls included in these models.
Birth Cohort 1973/74 1975/76 1977/78 1979/80Wages observed at: - - 2005-09 2007-11Wages observed at age: - - 28-31 28-31Good degree class premiumrelative to lower degree class
- - 0.062(0.070)
0.033(0.246)
No. of obs - - 1297 1587R2 - - 0.119 0.138 Wages observed at: - 2005-09 2007-11 -Wages observed at age: - 30-33 30-33 -Good degree class premiumrelative to lower degree class
- 0.114(0.001)
0.107(0.001)
-
No. of obs - 1313 1474 -R2 - 0.135 0.131 - Wages observed at: 2005-09 2007-11 - -Wages observed at age: 32-35 32-35 - -Good degree class premiumrelative to lower degree class
0.090(0.012)
0.090(0.005)
- -
No. of obs 1394 1496 - -R2 0.162 0.180 - -
21 June 2014 ESPE 2014 Braga 21
Results 3: UK evidence on returns by degree class (across cohorts)
Estimated log-earnings premia (USR; HESA: selected cohorts) and by university type, graduates aged 21-23
Results 3: UK evidence on returns by degree class (across cohorts) - Estimated
log-wage good degree class premia (GCS: 1985 and 1990) Notes: See notes to Table 4.
Graduate cohort 1985 1985 1990 1990
Wages observed at 1986 1991 1991 1996
Wages observed at age 21-23 26-28 21-23 26-28
Good degree class premiumrelative to lower degree class
0.064(0.023)
0.079(0.020)
0.049(0.014)
0.079(0.014)
No. of Obs 1330 1738 2839 3652
R2 0.139 0.150 0.131 0.119
21 June 2014 ESPE 2014 Braga 23
5. Conclusions/limitations/further work
(i) Some evidence that substantial increase in API of women has been associated with a fall in the college wage premium- but not correcting for selection into
employment. (ii) Some evidence that degree class premium
has increased over time with increase in API(iii) Need to analyse more recent
HESA/DLHE/follow-up data.(iv) Need to complement large data results with