Want a postgraduate degree that ups your salary? Choose carefully

Studying for a master’s or PhD does not necessarily lead to higher earnings, UK study finds

September 16, 2020
Piggy banks

Studying for a master’s degree is associated in some subjects with lower earnings for UK 35-year-olds compared with graduates who do not pursue a postgraduate qualification, a new report suggests.

Students who “double down” by pursuing some arts and humanities subjects at postgraduate level after studying them as undergraduates see some of the biggest negative effects on their future salaries, according to the study from the Institute for Fiscal Studies.

The report is the latest in a series of findings from Department for Education-funded research into the government’s Longitudinal Education Outcomes dataset, which uses tax records to link school and university achievement with later earnings.

It finds that, generally, the earnings of those with a postgraduate qualification are several thousand pounds higher than those of graduates who did not study beyond undergraduate level.

However, much of this can be explained by postgraduate students tending to be from more advantaged backgrounds and having higher prior attainment. Controlling for these effects and other factors leads to a “surprising” change in this premium, the report says.

For instance, when comparing master’s graduates with otherwise similar individuals who do not continue studying after an undergraduate course, women earn only 2 per cent more and men get 2 per cent less. Women who take a PhD are less affected, earning 8 per cent more at 35 than those without a postgraduate qualification, but men with a PhD earn 9 per cent less.

The authors stress that there is huge variation between subjects studied at postgraduate level, with those taking master’s courses such as business, economics and law seeing returns over bachelor’s graduates of about 10 per cent for both men and women.

But some arts and humanities master’s courses – including English, languages, creative arts and history – are associated with men earning more than 20 per cent less than similar individuals without a postgraduate degree.

The paper also warns that “doubling down” on an undergraduate degree in some of these fields by also then pursuing the same subject at postgraduate level can result in some of the largest negative returns.

For instance, men who took a master’s in English or a language after studying these subjects at undergraduate level have earnings of around 30 per cent less compared with those who did not go into postgraduate education.

However, the authors point out that there can be a large positive effect for switching subject field at postgraduate level, with English bachelor’s graduates who then take a science or business-related master’s boosting their relative return by 20 per cent for women and 40 per cent for men.

“These results suggest that for individuals with an undergraduate degree in a low-return subject, doubling down and staying in the same field for a master’s degree is bad for earnings potential, while switching fields can significantly boost earnings outcomes,” the study says.

Laura van der Erve, co-author of the report and a research economist at the IFS, said that it was a key finding of the work that “on average, master’s graduates do not see substantially higher earnings than otherwise similar individuals who don’t go beyond undergraduate level”.

“However, this obscures huge differences across subjects,” she said, adding that “graduates of nearly all undergraduate subjects are able to access postgraduate courses that substantially boost their earnings”.

Elsewhere, the report offers potential evidence as to why it has become difficult to attract school teachers in some science subjects, with postgraduate teaching courses tending to cut relative earnings for students holding an undergraduate degree in economics, law and many STEM areas.

It also points out that looking at earnings for those aged 35 may not fully reflect that postgraduate qualifications, particularly PhDs, may boost salaries later on in life, while students may also be pursuing such degrees for other reasons.

“Of course, it is true... that individuals may not be trying to maximise their earnings potential and are instead looking to specialise in areas that will enable them to enter a career that they find interesting and fulfilling. This is something that we are not able to consider here,” the paper says.


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Reader's comments (4)

For most of us, getting a PhD is about personal challenge. It has never been the case in my experience that it led to a higher salary and was never portrayed as such. Doing a PhD should be for the "mountain climbing" reason, i.e. because it is there. For those of us who wanted the ultimate challenge after our undergraduate degrees, it was always the case that we would do PhDs. I realise that there are some areas where PhDs are essential but engineering is not one of them so one undertakes it for non-financial reasons (which explains why it is so hard to get home applicants even for funded places in my Russell Group department).
This article takes the rather narrow view that the only point in getting an education is to boost your bank balance. As with the commentor above, there are many reasons why someone might want to take a higher degree. You may be so fascinated by one topic in your area of study that you wish to delve deeper. You may want to switch to another discipline, hence a 'conversion masters' to provide essential information. I'm doing a PhD at the grand old age of 61 mostly for fun, but also as a late entrant to academia I'm surrounded by doctors and don't want to be left out :)
summiting the mountain ...to catch gold may lead to disappointment. ... to catch a better view, yes. Post graduate should be about the latter Basil jide fadipe.
I just wanted PhD in mass communication.


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