Graduates: Pay
(asked on 23rd February 2016) - View Source
Question to the Department for Business, Energy and Industrial Strategy:
To ask the Secretary of State for Business, Innovation and Skills, what estimate he has made of the average difference in salaries earned by graduates and non-graduates ten years after graduation.
The most recent Department for Business, Innovation and Skills (BIS) commissioned research (Walker and Zhu, 2013[1]) shows that, on average, a male graduate will earn £168,000 more, and a female graduate £252,000 more, over their lifetime than someone without a degree but with 2 or more A-levels, net of income tax, VAT, National Insurance and student repayments (2012 prices).
Walker & Zhu (2013) also provide a breakdown of these figures across the graduate earnings distribution, as set out in Table 1.[2]
Table 1: Graduate premiums from completion of a first degree for individuals by gender across earnings deciles
Individual Net Present Value | Graduate earnings deciles | |||||||||
| Average | 1st | 2nd | 3rd | 4th | 5th | 6th | 7th | 8th | 9th |
Male | 168 | 173 | 168 | 163 | 161 | 167 | 157 | 154 | 166 | 206 |
Female | 252 | 247 | 240 | 241 | 241 | 245 | 255 | 252 | 285 | 265 |
Measurement unit £1,000
This research focuses on the lifetime returns from a degree. Estimates relating to ten years after graduation are not available.
BIS’ Graduate Labour Market Statistics (Q2 2015[3]) publication shows that, on average, young graduates (21-30 years old) earn £25,000 per annum compared to young non-graduates (21-30 years old) who earn £18,000. These figures do not control for differences in the characteristics of the graduate and non-graduate populations, and are gross of both taxes and student loan repayments.
The Government is taking steps to improve data collection on graduate earnings and ensure students continue to get value for money. The Small Business, Enterprise and Employment Act enabled linking of education and HMRC tax data. The Government is consulting on the future inclusion of this data in the proposed Teaching Excellence Framework.
[2] As before, these estimates are net of tax and other costs, but also vary due to effect of income tax thresholds and the progressive nature of the student loan repayment model. For example you can see male graduates in the 1st and 2nd earnings deciles have higher graduate premiums than those between the 3rd and 8th earnings deciles as they are less likely to repay all of their student loan and will pay proportionately less income tax, National Insurance and VAT.