Graduate 'premium' more significant for women

By Nuffield Foundation

The significantly higher earnings that graduates in England can expect over those who didn’t study at university, the ‘graduate premium’, has been revealed in detail by a large new study – the first of its kind, funded by the Nuffield Foundation.

Researchers at the Institute for Fiscal Studies (IFS), Harvard University and the University of Cambridge found that median earnings of English women around 10 years after graduation were just over three times those of non-graduates. Median earnings of male graduates were around twice those of men without a degree. This advantage for graduates was maintained through the recent recession, although all groups saw significant falls in their earnings during this period.

The study shows that the recession had a large impact on the earnings of people in their twenties and early thirties. This is particularly true for women, who experienced much lower earnings than previous cohorts. However, the research also indicates that graduates fared better than non-graduates – they saw proportionally smaller drops in their earnings – with higher education providing some protection from the economic downturn.

The researchers used anonymised tax data and student loan records for over 260,000 graduates for up to 10 years after graduation. This large database provides a far more accurate picture of earnings than was previously possible, The data include cohorts of graduates who started university in the period 1998-2011 and whose earnings (or lack of earnings) are then observed in the tax year 2011/12, though the results hold for graduates in other tax years.

This is the first time a big data approach has been used to look at graduate earnings. The administrative data gives a much more accurate picture than existing surveys which tend to be based on much smaller samples self-reporting their earnings and are subject to biases.

The researchers, report their results in a new working paper. Other findings include that:

  • The administrative data suggests that the annual earnings of the highest earning graduates are greater than appears in other data. For example, 10 years after graduation, 10% of male graduates were earning more than £55,000 per annum, 5% were earning more than £73,000 and 1% were earning more than £148,000. Ten years after graduation, 10% of female graduates were earning more than £43,000 per annum, 5% were earning more than £54,000 and 1% were earning more than £89,000.
  • Using this “big data” also suggests there is less gender inequality among graduates than other data sources imply. The study puts the male–female annual earnings gap 10 years after graduation at around 23%, whereas the Labour Force Survey suggests it is around 33%.
  • Graduates suffered proportionately less during the recession than non-graduates in terms of their earnings, implying that having a degree provides some protection from bad labour market outcomes.
  • Over the recession period females fared proportionately worse than males in terms of annual earnings. For example, female graduates in their late 20s saw their real earnings decline just as, in normal times, they would have expected rapid earnings growth as they gained experience.

Jack Britton, a research economist at the IFS and an author of the working paper, said: “This study shows the value of a degree, in terms of providing protection from low income and shielding graduates from some of the negative impact of the recent recession on their wages. We find this to be particularly true for women.”

Neil Shephard of Harvard University, another author of the paper, said: “This type of big data analysis allows us to track how earnings evolve during a career. This is important in measuring human capital and understanding why this varies between subpopulations of graduates.”

Anna Vignoles of the University of Cambridge and the IFS, and another author of the report, said: “This study illustrates the power of using big data to better understand the graduate labour market and shows that previously we have underestimated the earnings of top graduates.”

ENDS

1. Download the working paper ‘Comparing sample survey measures of English earnings of graduates with administrative data’ by Jack Britton, Neil Shephard and Anna Vignoles (PDF).

2. The research team used administrative data from both the Student Loan Company (SLC) and Her Majesty’s Revenue and Customs (HMRC) to observe how the earnings of students who take out a loan from the SLC change through the years as they mature in the labour market. The team compared the administrative data set with the UK Labour Force Survey and other survey data on graduates.

3. The researchers note that they can only identify graduates who have borrowed money from the Student Loan Company. This is around 85% of English graduates in the period under consideration. There are therefore some graduates for whom there is no data but we have reason to believe that they are likely to be higher earning graduates, on average. As a result, if anything, the administrative data is likely to underestimate graduates’ earnings.

4. The researchers were granted access to records in a secure HMRC data enclave after all identifying material in the data had been anonymised. Team members who use this data have been subject to the same strict confidentiality and data protection requirements as HMRC staff and liable to legal penalties for breaches.

Related


Explore our projects

New

Education | 2025 - 2026

Investigating performance across Key Stage 2 maths topics

View project
Teacher with secondary pupils
New

Education | 2024 - 2028

Teaching improvement through data and evaluation (TIDE)

View project
New

Welfare | 2024 - 2027

Gypsy, Roma, Traveller Youth: mitigating exclusions using the digital?

View project
New

Education | 2024 - 2026

Long-term outcomes of high-achieving disadvantaged children

View project
New

Education | 2024 - 2026

Exploring academic selection and grammar schools in Northern Ireland

View project
A front view of a father and his two children. He is carrying his young son in his arms and his daughter is riding her scooter along the footpath as he pushes his son's scooter along the way.
New

Justice | Welfare | 2024 - 2026

Challenging justice inequalities with children in conflict with the law 

View project
New

Education | 2024 - 2026

Pupil school mobility: types, pathways and implications for education

View project
Young girl using an iPad at home
New

Education | 2024 - 2024

Early years digital media literacy review

View project
New

Education | 2024 - 2026

Can digital parenting interventions benefit early language development?

View project
New

Welfare | 2024 - 2027

Performance Tracker 

View project
Little girls in primary school uniform

Education | 2024 - 2026

Developing a classroom intervention to improve conversation skills

View project
New

Education | 2024 - 2026

Vocabulary for Reading: the power of words

View project
Young girl using an iPad at home
New

Education | 2024 - 2024

Early years digital media literacy review

View project
A front view of a father and his two children. He is carrying his young son in his arms and his daughter is riding her scooter along the footpath as he pushes his son's scooter along the way.
New

Justice | Welfare | 2024 - 2026

Challenging justice inequalities with children in conflict with the law 

View project
New

Education | 2024 - 2026

Pupil school mobility: types, pathways and implications for education

View project
Teacher with secondary pupils
New

Education | 2024 - 2028

Teaching improvement through data and evaluation (TIDE)

View project
Secondary school music teacher smiles at students working together at a keyboard.
New

Education | 2024 - 2025

Teacher recruitment & retention challenges in England

View project
New

Welfare | 2024 - 2027

Gypsy, Roma, Traveller Youth: mitigating exclusions using the digital?

View project
New

Education | 2024 - 2026

A feasibility and pilot trial of the Early Years Library

View project
New

Welfare | 2024 - 2027

Performance Tracker 

View project
New

Education | 2024 - 2026

Can digital parenting interventions benefit early language development?

View project
Mother wearing hijab holding her toddler son on her knee, smiling at each other
New

Welfare | 2024 - 2025

Afghan resettlement in England: outcomes and experiences 

View project
New

Education | 2025 - 2026

Investigating performance across Key Stage 2 maths topics

View project
three women walking along street laughing and smiling
New

Welfare | 2023 - 2025

Revealing social capital

View project
In progress

Education | 2023 - 2024

Artificial intelligence and education

View project
A woman is sat on the edge of a bed staring at her phone while her daughter is in the background.
In progress

Welfare | 2023 - 2025

Virtual parent support portals: a new research and practice agenda

View project
Two little boys and a little girl, all wearing primary school uniform, work together to solve a puzzle in their classroom.
In progress

Education | 2023 - 2025

What has ‘Free School Meals’ measured and what are the implications?

View project
Teenager hugging their mother
In progress

Welfare | 2023 - 2026

The long-term effects of being a young carer

View project
Elderly woman and adult daughter out shopping
In progress

Welfare | 2023 - 2026

Connecting pensions, health and care

View project
Father and daughter having fun at home
In progress

Education | 2023 - 2024

Optimisation and feasibility of Triple P parenting programme for remote delivery

View project
Early years professionals playing with children
In progress

Education | 2022 - 2024

Understanding the take-up of early education entitlements

View project
Primary school children using a microscope during a lesson outside at school
In progress

Education | 2023 - 2025

Purposeful and effective practical work in primary school science

View project
Male and female apprentices looking at car engine
In progress

Education | 2022 - 2025

Work or study? Gender and the transition from school to work

View project
Mother, father, son and daughter standing in front of their house
In progress

Welfare | 2023 - 2025

A regional regeneration index to track socioeconomic ‘Levelling Up’

View project
Two teenage male pupils study a science lesson as part of their post-16 options
In progress

Education | 2019 - 2024

Post-16 pathways: the role of peers, family background and expectations

View project
Man working on a laptop using sign language on a video call
In progress

Welfare | 2023 - 2024

Designing inclusive remote and hybrid working to support disabled workers

View project
Young girl using an iPad at home
New

Education | 2024 - 2024

Early years digital media literacy review

View project
Secondary school music teacher smiles at students working together at a keyboard.
New

Education | 2024 - 2025

Teacher recruitment & retention challenges in England

View project
New

Welfare | 2024 - 2027

Gypsy, Roma, Traveller Youth: mitigating exclusions using the digital?

View project
New

Education | 2024 - 2026

A feasibility and pilot trial of the Early Years Library

View project
New

Welfare | 2024 - 2027

Performance Tracker 

View project
New

Education | 2024 - 2026

Can digital parenting interventions benefit early language development?

View project
Mother wearing hijab holding her toddler son on her knee, smiling at each other
New

Welfare | 2024 - 2025

Afghan resettlement in England: outcomes and experiences 

View project
New

Education | 2025 - 2026

Investigating performance across Key Stage 2 maths topics

View project
three women walking along street laughing and smiling
New

Welfare | 2023 - 2025

Revealing social capital

View project
New

Education | 2024 - 2026

Vocabulary for Reading: the power of words

View project
New

Education | 2024 - 2026

Spending across different stages of education

View project
New

Education | 2024 - 2026

Exploring academic selection and grammar schools in Northern Ireland

View project
Reception class children using a parachute in a PE lesson
Reported

Education | 2022 - 2023

A movement and story-telling intervention for reception children

View project
Grandparents having fun outdoors with their granddaughter, who is eating an apple and laughing: Understanding family and community vulnerabilities in transition to net zero
Reported

Welfare | 2021 - 2023

Understanding family and community vulnerabilities in transition to net zero

View project
Father and son using laptop at home
Reported

Welfare | 2021 - 2024

Developing a minimum digital living standard for households with children

View project
Side view of two female high school students in classroom working on laptops social distancing. Student in foreground is in focus and student in background is blurred
Reported

Education | 2021 - 2022

COVID-19 and disadvantage gaps in England 2020 and 2021

View project
Close up of a young girl and her father wearing protective face masks during the COVID-19 pandemic outside.
Reported

Welfare | 2021 - 2023

The Economy 2030 Inquiry: navigating a decade of change

View project
Young boy draws and plays with a globe as part of nursery education
Reported

Education | 2020 - 2022

COVID-19 and childcare: local impacts across England

View project
Reported

Education | 2020 - 2022

Ethical principles underpinning co-production with young people

View project
Reported

Education | 2020 - 2021

COVID-19 mitigation measures: education provision and access to special schools

View project
Young-boy-uses-tablet-with-mother-for-maths-learning-Can-maths-apps-add-value-to-learning-PROJ
Reported

Education | 2020 - 2022

Can maths apps add value to learning?

View project
Toddler-gleefully-eats-baked-beans-How-COVID-19-is-affecting-food-security-proj
Reported

Welfare | 2020 - 2021

How the COVID-19 crisis is affecting food security

View project
Male secondary school student working at home on laptop
Reported

Education | 2020 - 2021

The impact of COVID-19 on mainstream schools in England

View project
Teenage-girl-looks-at-smartphone-next-to-laptop-Growing-up-under-COVID-19-PROJ
Reported

Education | Welfare | 2020 - 2022

Growing up under COVID-19

View project
Search projects

We improve people’s lives by funding research that informs social policy, primarily in Education, Welfare and Justice. We also fund student programmes that give young people skills and confidence in science and research.

We offer our grant-holders the freedom to frame questions and enable new thinking. Our research must stand up to rigorous academic scrutiny, but we understand that to be successful in effecting change, it also needs to be relevant to people’s experience.

Profile