September 25, 2015
The “graduate premium” is more significant for women, reveals new study
Around 10 years after graduation the median earnings of English women are over three times those of their non-graduate compatriots, reveals a new study by the Institute for Fiscal Studies, Harvard University, and the University of Cambridge.
The study aimed to quantify the impact of the great recession on graduate and non-graduate earnings, finding large reductions in real earnings for all groups, a greater impact on women’s earnings, but less gender inequality amongst graduates than indicated in previous studies.The “graduate premium”—the higher earnings that graduates can expect over those who didn’t study at university; three times the earnings of non-graduates for women and twice the earnings for men—was maintained through the recent recession, suggesting higher education provided some protection from the economic downturn.
The report’s results on gender may be particularly important as they highlight that most of the lowest paid are non-graduate females. Women were also more negatively impacted by the recession than men, experiencing much lower earnings post-recession than previous cohorts.
IZA World of Labor author Douglas Webber has explored whether the return to education is the same for everyone. He warns that although education remains the most certain path to financial stability, the benefits of a degree may not outweigh the costs for everyone, especially in light of high tuition costs and different rates of return for different college degrees.
However, in her article on the labor market success of university dropouts, Sylke V. Schnepf notes that “it is better to enroll in university and drop out than not to enroll at all,” as university dropouts have a better chance of acquiring professional and management positions than upper secondary school graduates who never enroll in university.
Exploring wage compression and the gender pay gap, Lawrence M. Kahn recommends focussing policy attention on facilitating women’s participation and retention in the labor market and on reducing barriers to entry into traditionally male fields.
Whilst, Solomon W. Polachek finds that data on equal pay legislation and the gender wage gap support government actions to stimulate a further rise in women’s lifetime work, increasing women’s incentives to invest in education and training, and better enabling them to climb the corporate job ladder.
The report can be read in full here.
Related articles:
Is the return to education the same for everybody?, by Douglas Webber
University dropouts and labor market success, by Sylke V. Schnepf
Wage compression and the gender pay gap, by Lawrence M. Kahn
Equal pay legislation and the gender wage gap, by Solomon W. Polachek