Differences in labour market gains from higher education participation

Machin, Stephen; Murphy, Richard and Soobedar, Zeenat (2009). Differences in labour market gains from higher education participation. National Equality Panel.


This report documents the qualifications and subsequent outcomes achieved by the different groups of interest for the National Equality Panel. Using data from the Labour Force Surveys (LFS) post 2001, we first compare the raw differences in highest qualifications, main activity and earnings for different genders, ethnicities and disability groups. Continuing from this we use statistical analyses to examine if there are significant differences in the benefits of qualifications to different groups. This is done in two ways: first looking at the gains from different qualifications within one discriminatory grouping; and second how outcomes differ over these groupings for all those with the same highest qualification.
The key findings are that there are large differences in the qualification levels between the groups, which are subsequently accompanied by diverse labour market outcomes. For an individual within a traditionally disadvantaged group, such as Pakistani/Bangladeshi females, the increases in probability of employment from obtaining qualifications are higher than the gains a White British female would make from the same qualifications. This is not the case for earnings, where most groups earn on average the same proportion more than their unqualified equivalent. For example a black female with A-Levels earns the same proportion more than her unqualified equivalent as white British female would.
Further to this we found that the outcomes of some groups were significantly worse than others even when comparing individuals with the same highest qualification level. This is true for both employment rates and gross earnings. For example, a Pakistani/Bangladeshi female with A-Levels as her highest qualification is 20% less likely to be employed compared with a similar White British Woman. For employment issues we cannot establish if this is due labour supply or demand effects, i.e. the actions of potential employees or employers.
We find a significant pay gap between the genders, but we are unable to establish if this is due to the loss of experience/career break commonly associated with children or systematic discrimination of females. The earnings differential across most ethnic/disability groups within qualification level is generally small, but we do find that individuals from Black and Pakistani/Bangladeshi groups earn less than their similarly educated White British counterparts, even when accounting for the type of job they are employed in. Black male graduates earn on average 24% less than white male graduates. These heterogeneous outcomes for graduates are further investigated in the accompanying report ‘Equality in the gains from University Education’.
The rest of the report continues as follows. Section two describes the data used, and the methods through which we got our results. Section three is split into two parts, part one describes the raw differences between the groups, and part two describes the relative gains each group gains from qualifications. The final section briefly summaries the results and concludes.

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