{"id":60213,"date":"2021-11-11T15:21:27","date_gmt":"2021-11-11T20:21:27","guid":{"rendered":"https:\/\/world.edu\/?p=60213"},"modified":"2021-11-11T15:21:27","modified_gmt":"2021-11-11T20:21:27","slug":"students-choice-of-university-has-no-effect-on-new-graduate-pay-and-a-small-impact-later-on-what-they-study-matters-more","status":"publish","type":"post","link":"https:\/\/world.edu\/students-choice-of-university-has-no-effect-on-new-graduate-pay-and-a-small-impact-later-on-what-they-study-matters-more\/","title":{"rendered":"Students\u2019 choice of university has no effect on new graduate pay, and a small impact later on. What they study matters more"},"content":{"rendered":"

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\nEvery year in Australia school leavers suffer ATAR anxiety, worrying about whether they will get into their preferred course and university.\u00a0New research<\/a>\u00a0by the Commonwealth Department of Education, using Australian Taxation Office earnings data, examines in detail how much difference what a person studies, and where, makes to their future income.<\/p>\n

It finds students\u2019 course choices matter more than their choice of university. Qualifications in some fields of study lead to much higher incomes nine years after graduation. Which university a student attends has little influence on short-term graduate earnings, but differences emerge over time.<\/p>\n

Why might graduates of some universities earn more?<\/strong><\/h4>\n

We would expect some university effect on earnings. Universities vary in their teaching quality, at least as\u00a0measured by student satisfaction<\/a>. In theory, those whose graduates learn more could expect labour market rewards.<\/p>\n

Whether justified by objective learning gains or not, some universities are better known and more prestigious than others. This could influence employers when choosing between job applicants.<\/p>\n

And some universities, especially those with many full-time and on-campus undergraduates, offer greater networking opportunities. The people met at university could open up employment and business opportunities.<\/p>\n

Why might graduates of some courses earn more?<\/strong><\/h4>\n

Previous research shows\u00a0graduate earnings vary greatly<\/a>\u00a0according to a degree\u2019s field of education.<\/p>\n

Some degrees are entry points to specific occupations. The pay for those jobs is a major influence on graduate earnings. Other degrees provide more general skills that are valued to a greater or lesser extent in the labour market.<\/p>\n

These differences reflect market conditions, occupational regulation and political decisions more than how good either the university or the graduate might be. University and graduate factors can influence who gets hired and promoted, but job markets set the salary range.<\/p>\n

What do the department\u2019s results show?<\/strong><\/h4>\n

The Department of Education\u2019s\u00a0graduate income report<\/a>\u00a0and\u00a0accompanying spreadsheets<\/a>\u00a0show earnings at various time points after graduation. I will mainly discuss the medium-term results, as at 2017-18 for people who graduated in the late 2000s.<\/p>\n

As the chart shows, bachelor degree earnings differ significantly by the field of study nine years after graduation. At the high end, half of medical graduates reported annual incomes of A$149,500 or more (the median). A quarter earned $206,900 or more (the 75th percentile). The equivalent figures for performing arts were $53,000 and $80,300.<\/p>\n

The overall results (including fields not shown here) were a median of $77,100 and a 75th percentile of $102,600.
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Source: Author\/ANU. Data: DESE graduate income data from Australian Taxation Office records<\/p><\/div><\/p>\n

The\u00a0department\u2019s statistical analysis<\/a>\u00a0shows substantial course differences persist after taking into account university attended and personal characteristics such as gender, socioeconomic background and ATAR. For example, compared to business and management graduates, law and engineering graduates earn an extra $11,000 a year.<\/p>\n

Much of the apparent variation in earnings between universities reflects differences in enrolment patterns. For example, universities with more graduates in high-paying fields such as medicine, law and engineering end up with higher median earnings than universities that focus on teaching or nursing.<\/p>\n

The department\u2019s analysis does show, however, that a decade after leaving university Group of Eight (Go8<\/a>) graduates earn about $4,300 a year more than others from a comparison group of universities. Australian Technology Network (ATN<\/a>) university graduates also earn more than non-Go8 graduates. These findings take into account course taken and personal characteristics such as gender, socioeconomic background and ATAR.<\/p>\n

Does this change our understanding of graduate outcomes?<\/strong><\/h4>\n

These findings confirm general patterns observed in previous research. They do so in ways that give us more confidence in earlier results.<\/p>\n

Several studies have found either\u00a0no<\/a>\u00a0or a\u00a0small<\/a>\u00a0Go8 salary advantage for new graduates, after taking into account other factors known to influence graduate pay. The short-term results (one to two years after graduation) using ATO data also report no such advantage.<\/p>\n

These findings count against strong prestige effects. If there were such effects, we would expect these to be greatest early in graduates\u2019 careers, before they have had a chance to demonstrate their quality to employers.<\/p>\n

Before now, longer-term earnings by university have been very difficult to analyse. Few data sources record both income and university attended more than three years after graduation.<\/p>\n

The main exception has been the\u00a0HILDA survey<\/a>. Its data were used in\u00a0a study I co-authored<\/a>\u00a0at the Grattan Institute in 2014 and\u00a0a later one<\/a>\u00a0by Curtin University researchers.<\/p>\n

Both these studies found small university and larger course effects on income. The Grattan paper also found Go8 and ATN graduates doing slightly better. The Curtin paper found an earnings disadvantage for regional university graduates, with other university grouping differences not statistically significant.<\/p>\n

At the time of the Grattan paper there was some surprise that the university differences were not larger. Given the modest number of graduates in the HILDA sample, including people who finished university at many different times, its findings needed to be checked using other data sources.<\/p>\n

The Department of Education\u2019s analysis includes most graduates who finished in the same year. It both provides a much larger sample and lets us compare people at similar points in their career who faced common economic conditions. The strong parallels between the HILDA and ATO-based findings give us confidence the conclusions are right.
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What you study matters far more than where you study in shaping your future prosperity, Australian research suggests. @JohnRoss49<\/a> reportshttps:\/\/t.co\/EFZjZaZjw3<\/a><\/p>\n

— Times Higher Education (@timeshighered) November 9, 2021<\/a><\/p><\/blockquote>\n