Graduate earnings: data by course and university draw closer

But government project may not capture ‘value added’ by some universities and courses, critic warns

March 30, 2016
Man grading/judging carrots, Muker Agricultural Show, England
Source: Alamy
Measuring up: graduate earnings will soon be able to be compared

Government data on graduate earnings by course and university could be used as a rationale to lift fee caps, but may not represent the “value added” by different courses and institutions, according to one economist.

The Treasury “red book” published alongside George Osborne’s Budget earlier this month reasserted a long-standing aim of the government, saying it “will bring together information about the wages of graduates of different courses and the financial support available across further and higher education to ensure that people can make informed decisions about the right courses for them”.

Meanwhile, a separate academic research project on graduate earnings by course and institution, led by a team of economists and with the involvement of the Institute for Fiscal Studies, is expected to publish its latest work in April.

Both projects aim to pair anonymised student data with HMRC data on earnings, to give more accurate information on graduate earnings over a longer period of time post-university than existing measures.

Identifying the universities that are the “best performers” on graduate earnings and loan repayment rates has been seen by some as a potential path to lifting the tuition fee cap for courses at those institutions.

Gavan Conlon, leader of the education and labour market team at London Economics, who has published analyses on student loans and graduate earnings, said of the government’s project that “data on graduate earnings and student loan repayments linked to institution/course of study will provide some apparent rationale for the removal of the fee cap in England”.

“However, from an economics perspective, these graduate earnings measures do not necessarily reflect the value added associated with different higher education institutions or courses,” he added.

“These earnings metrics measure the economic return to individuals in possession of an undergraduate degree and not the economic benefit to the degree itself. This means that any policy relaxing the fee cap is likely to reinforce institutional differences in relation to the level of resource, which will further widen the gap between well-off and less well-off students.”

Last year’s Small Business, Enterprise and Employment Act made it possible for individuals’ anonymised HMRC data to be shared with the Department for Business, Innovation and Skills, which could then combine them with information on what and where they studied using Higher Education Statistics Agency data.

BIS said at the time that the legislation would “help to create an incentive and reward structure at universities by distinguishing the ones that are delivering the strongest enterprise ethos and labour market outcomes for their students”.

But it does not appear that the mention of the project in the Budget red book is any reflection of the project reaching fruition. A BIS spokesman said there was no date yet set for publication of the data and “discussions are ongoing with the sector”.

The separate academic research project, titled “Estimating the Human Capital of Graduates”, which has also attracted government attention, is the work of Anna Vignoles, professor of education at the University of Cambridge; Neil Shephard, professor of economics and statistics at Harvard University; and Lorraine Dearden, director of the education sector at the Institute for Fiscal Studies.

Professor Vignoles said the team’s research will “give information on variation in earnings by subject, institution and the main focus will be how earnings vary by an indicator of students’ socio-economic background”.

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