Role of region in England’s key earnings data emerges

Analysis of graduate pay data that could shape future of English universities lays bare contrasts in regional labour markets

July 22, 2019
Source: iStock

Graduates who can afford to move to another part of the UK for work after leaving university have a major advantage over others in terms of earnings potential, suggests an analysis of the earnings data that could shape the future of English universities.

London in particular offers such a high wage premium that even non-graduates in the capital earn more on average than graduates employed in most other regions of the country.

The findings come from a regional analysis of the Longitudinal Education Outcomes dataset, which uses government tax records to track the employment of graduates several years after leaving university.

The LEO project has attracted criticism in the past for publishing graduate earnings data by provider that seem heavily influenced by a university’s location, reflecting the large salary variations by UK region.

The new analysis from the Department for Education confirms the major effect that these regional differences have on earnings, with the median salary for graduates living in London being almost £7,000 higher five years after university than those in north-east England, for example.

Many in the sector fear that the LEO data could in future be used by the government to set funding levels for institutions’ courses. England’s Augar review appeared to open the door to such a scenario in its recommendation that top-up public funding to replace income lost through a tuition fee cut could be allocated according to the “social and economic value” of courses.

By highlighting the significance of geographical location in earnings, the DfE’s analysis could undercut the view that choice of course or university is the key factor in earnings and, thus, hamper any attempt to use the data as performance metrics for institutions.

The data also show that non-graduates with at least five A* to C grades at GCSE were earning a median salary of £26,200 in London, higher than peers with a degree living in every other region of England except the south east and the east of England. However, the report does reveal that graduates earn about 20 per cent more than non-graduates within the same region.

Other statistical modelling in the report considers the impact of graduates’ regional movements after other factors such as school attainment are accounted for. This also “corroborates the idea that moving does lead to increased earnings”, the report says.

“Those who moved for university and then moved elsewhere (and not their home region) saw the largest impact on their earnings (8.7% increase compared to those who stayed in the same region to study and for work after),” it says.

Meanwhile, “those who stayed in their home region to go to university and then moved elsewhere afterwards saw a larger impact (7.6%) than those who moved region for university and then returned to their home region [for work] (1.4%)”.

“This suggests that moving for work by itself will increase your salary more than moving to go to university.”

Anna Vignoles, professor of education at the University of Cambridge, said it was important to account for the cost of living, especially housing, when considering the fact that wages were higher in London for graduates and non-graduates.

“With many costs far higher in London, it would be odd if graduate salaries were not,” she said.

However, she added, there was also a “London premium…in terms of career opportunities”, so “not just higher wages but obviously quantity and quality of jobs”.

“The implications for social mobility are that those who can afford the move to London…may do disproportionately well and with knock-on impacts for the regions they leave behind,” Professor Vignoles said.

The report also suggests that the vast majority of students – 82 per cent – are living in their original home region a year after graduating, with just over half of those having gone to university in the same area. Even after 10 years, most students (65 per cent) are still in their home region.

Professor Vignoles said the correlation between home area, university location and location of work was particularly prevalent “for students from lower income backgrounds”.

“That speaks to the importance of local university provision for some students and the role of local universities in supplying the local graduate labour market. Of course looked at through the lens of social mobility, the inability for some students to move far from home does limit their options,” she added.


Print headline: Regions rule graduates’ paydays

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Reader's comments (1)

I have thought this intuitively ever since these flawed metrics of 'graduate earnings' started floating around, so nice to see this confirmed by the data. I am however concerned about privacy issues. Have former students consented to the use of their data in this manner? Records have to be collected for taxation purposes but is it a breach of GDPR to run this kind of analysis? Stepping outside of the purpose for which the information was collected, methinks.