Graduate salary premium ‘bigger for women’

But men continue to earn significantly more on average, Institute for Fiscal Studies analysis reveals

September 24, 2015
Woman and coins

The graduate salary “premium” is bigger for women than it is for men, a major study reveals.

Researchers at the Institute for Fiscal Studies, the University of Cambridge and Harvard University found that women’s median earnings in England a decade after graduation were more than three times those of women without a degree.

In contrast, the median earnings of male graduates were about twice those of men without a degree.

The study, based on anonymised tax data and student loan records for more than 260,000 people who started university between 1998 and 2011, confirms that male graduates continue to earn considerably more on average than their female counterparts.

But it suggests that the gap is smaller than was previously thought, putting it at about 23 per cent 10 years after graduation, compared with the 33 per cent suggested by data in the Labour Force Survey.

The research, funded by the Nuffield Foundation, also found that graduates appeared to be shielded from the effects of the so-called great recession, which the UK entered in 2008, compared with non-graduates.

Female graduates were affected more badly than males, however.

And the study also suggests that the graduate premium may be underestimated among the highest earners. Ten years after graduation, 10 per cent of male graduates were earning more than £55,000 per annum, 5 per cent were on more than £73,000 and 1 per cent were earning more than £148,000.

Ten per cent of female graduates were earning more than £43,000 per annum, 5 per cent had a salary of more than £54,000 and 1 per cent were on more than £89,000.

Jack Britton, a research economist at the IFS who authored the report with Neil Shephard of Harvard and Anna Vignoles of Cambridge, said that the findings were illuminating.

“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,” Dr Britton said. “We find this to be particularly true for women.”

Nicola Dandridge, the chief executive of Universities UK, said that the value of a degree was “lifelong”.

“Although the research revealed that median earnings of English women about 10 years after graduation are substantially higher than their non-graduate counterparts, there is still a significant gap between the earnings of male and female graduates,” she added. “This is something that needs to be looked at and addressed.”

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