GCCA | Graduate Careers Council of Australia

Graduate Careers Australia

The Graduate Grapevine – Number 3, March 2006

Beyond the Financial Benefits of a Degree

Introduction

Much has been said about the extra earnings power that graduates enjoy, and the ‘graduate premium’ is a well-researched field. But of course, getting a degree is not only about money – graduates, and society alike, benefit in a far wider and more profound sense from a high-skill workforce.

This article draws on a wide range of analysis, but the [UK] Department for Education and Skills (DfES)-funded Centre for Research on the Wider Benefits of Learning is the driving force behind much of this work. More detail of their work program is available at www.learningbenefits.net .

Graduate Job Quality

It is well known that graduates earn more from their jobs than non-graduates, and they have a lower risk of unemployment. But job quality goes further than this: graduates are more likely to be in high-level positions using their university-acquired skills, and also have greater promotion prospects1.

Graduates also receive more training than non-graduates. Figure 1, from the Labour Force Survey (LFS), shows that 40-45 per cent of graduates and postgraduates received job-related training in the previous 13 weeks, compared with just 25 per cent of those holding GCSEs [General Certificate of Secondary Education] as their highest qualification.

The LFS also shows that workers with higher education qualifications have greater flexibility in their work. For example, graduates are twice as likely to work at home in their main job as those with level 3 qualifications (ie. two or more A-levels or equivalent).

The Health Benefits of a Degree

Graduates live healthier lifestyles than non-graduates. For a start, non-graduates educated to level 2 (ie. five or more GCSEs at A* - C or equivalent) or below are 75 per cent more likely to be a smoker at age 30, compared to a similar individual educated to degree level or higher2. Graduates are also more likely to exercise than non-graduates, and are less likely to be obese (with an average graduate having a three per cent lower Body Mass Index compared with a similar individual educated to level 2 or below)3.

Consequently, graduates enjoy better health outcomes (see Figure 2)[A]. Those educated to degree level or higher are between 70-80 per cent more likely to report ‘excellent’ health, compared with a similar individual educated to level 2 or below, and those with level 4 sub-degree qualifications are around 40 per cent more likely to report excellent health.

In addition, graduates are between 35 per cent (women) and 55 per cent (men) less likely to suffer from depression, compared with a similar individual educated to level 2 or below. Those educated to level 4 sub-degree are 40 per cent less likely to suffer from depression. But compared with similar people with level 3 qualifications the effect is far smaller.

Intergenerational Effects

The benefits of achieving a higher education qualification are not just enjoyed by the graduate, but there are knock-on effects to their children. Figure 3 displays raw data from the Youth Cohort Survey4. The first three measures show that graduate families (defined as families where at least one parent is educated to degree level) are more engaged with their child’s education – they are more involved with school work, more often read to the child at night when they were younger and more regularly attend parents evenings. The last two measures show that their child is also subsequently more successful at school. They are more likely to have good attendance at school and are far more likely to do well at GCSE.

This evidence is also supported by more formal statistical analyses of other datasets5. It has been found, for example, that graduates are half as likely to see educational difficulties in their own children, compared with parents educated to below A-level, and also tend to own more children’s books.

Citizenship

Figure 4 shows that graduates are more likely to engage actively in their communities. Male (female) graduates are over 3.5 (2.5) times more likely to be a member of a voluntary organisation than someone educated to level 2 or below.

The chart also shows the association between having a degree and voting. Graduates are over 50 per cent more likely to vote [Voting is not compulsory in the UK.] than those educated to, at most, level 2 (though only around 20 per cent more likely compared with A-level holders). Related to voting behaviour, there is also evidence showing that graduates (relative to both A-level and below A-level holders) are significantly more likely to demonstrate a critical awareness of political issues. But note that the benefits of all these measures are less marked for those educated to level 4 sub-degree.

Positive Attitudes

Degree holders are significantly more likely to have a positive attitude towards diversity and equal opportunities. Graduates are between 30 per cent and 40 per cent more likely to hold positive attitudes to race and gender equality, compared with a similar individual educated to level 2 or below[B]. There is also found a positive effect for those educated to level 4 sub-degree, but, again, the association is weaker.

Spillover to the Wider Economy

Employers benefit from graduates through a more productive and healthy workforce, but also there is some evidence that highly-skilled workers more quickly adapt to new tasks and technologies, and are themselves a direct source of innovation6. Further, there is compelling evidence to show how education investment results in higher economic growth rates for the economy as a whole, and one report attributed tertiary education as being the most important in OECD countries7.

Anything Else?

Using evidence linking income levels and criminal activity, it has been suggested that there are savings to be made through reduced property and vehicle thefts – though much of this research focuses on improving income levels at the lower end of the wage distribution8.

In summary, while graduates still continue to earn significantly more than non-graduates, it is very easy to forget the wider benefits. But while this article summarises what we know about these effects, many of the more potent benefits of higher education may be intangible, or more subtle, than those shown here.

References

1. Higher Education, Skills and Employment: careers and jobs in the graduate labour market, K Purcell et al, Employment Studies Research Unit (ESRU)/Institute for Employment Research (IER), 2004.

2. Revisiting the Benefits of HE, J Bynner et al, Bedford Group for Lifecourse and Statistical Studies, The Institute of Education (IoE), 2003; p23. This uses the Birth Cohort Study – which follows a cohort of individuals born in 1970. Note that where the analysis compares ‘similar individuals’, formal regression techniques have been used to strip-out characteristics of graduates and non-graduates which might otherwise bias the results.

3. ibid p25

4. Internal analysis of Cohort 10, Sweep 1.

5. The Wider Benefits of HE, J Bynner & M Egerton, report by IoE for the Higher Education Funding Council in England (HEFCE) and the Smith Institute, 2001. HEFCE report 01/46.– see p47.

6. Human Capital Investment, R Blundell et al, Fiscal Studies, vol. 20(1), p.14, 1999, Institute for Fiscal Studies (IFS).

7. The Returns to Education: macroeconomics, B Sianesi et al, Journal of Economic Surveys, Vol 17, No. 2, 2003.

8. Quantitative Estimates of the Social Benefits of Learning, 1: Crime, L Feinstein, Wider Benefits of Learning Research Centre, 2002.

Notes

[A] - Figures 2 and 4 show the odds of people with different qualification level having a particular characteristic of outcome, relative to a similar individual educated to level 2 or below. So if graduates have a value of 2, then they are twice as likely to have the characteristic or outcome, compared to a similar person educated to level 2.

[B] - This is measured by examining survey responses to a series of questions, such as “are mixed race marriages alright?”, and “should there be more women in important jobs?”.