Graduates reap high returns on degree

September 17, 2004

An OECD report says higher education is still valuable. Tony Tysome reports

A degree is as valuable as ever even though half the developed world's young adults now complete a higher education course, a study of global education trends has concluded.

An average of 50 per cent of people across 30 countries enter higher education at some stage in their life, and a third gain a degree or masters qualification, according to the Organisation for Economic Cooperation and Development.

Six OECD countries saw 50 per cent growth in university enrolments between 1995 and 2002. Numbers of new entrants rose by 20 per cent in eight others, including the UK, over the same period.

Higher education participation rates have reached 70 per cent in Australia, Finland, Iceland, Poland and Sweden, and OECD analysts said trends indicated that participation in some countries could soon reach 80 per cent.

Continued growth is sustainable because the returns on investment in higher education for individuals, society and countries' economies are still healthy, despite rising participation and graduation rates, the OECD says.

Andreas Schleicher, head of the OECD's indicators and analysis division, said the findings were a surprise, as it had been expected that higher education qualifications would be devalued by big increases in the number of graduates. As long as the returns on higher education investment continued to be strong, growth in participation would continue, he said.

The OECD's findings, contained in its report Education at a Glance 2004 published this week, show that there has been no decline in the higher salaries commanded by graduates compared with people who hold only secondary education qualifications.

In the UK, graduates earn 59 per cent more than non-graduates - a differential exceeded only by graduates in Hungary (who earn 110 per cent extra), the US (86 per cent), the Czech Republic (79 per cent) and Portugal (78 per cent).

Graduates are also more likely to find a job. On average in OECD countries, about 89 per cent of men and 78 per cent of women with a degree are in employment, compared with 84 per cent of men and 63 per cent of women without.

In the UK, a person who progresses in higher education after leaving school can expect to gain 10 per cent on their investment every year from graduation to the age of 65. The study shows that rates of return for those who do not enter higher education until the age of 40 are lower - 4 per cent.

Eliminating tuition fees as an incentive is of limited value, adding just 1.8 per cent on average to the returns on a degree.

Social returns, calculated by comparing public spending with productivity, are also strong. In the UK, the return on investment is estimated to be 13 per cent.

Leader, page 14

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