A Comparison of Earnings Related to Higher Level Vocational/Technical and Academic Education

Hector Espinoza and Stefan Speckesser (NIESER)

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A Comparison of Earnings Related to Higher Level Vocational/Technical and Academic Education

This new report from the National Institute of Economic and SocialResearch is the first econometric study comparing earnings of people with higher vocational/technical qualifications (Level 4 or 5) to those of degree holders that attended Russell Group and non-Russell Group universities. The empirical analysis is based on four sets of linked data of one full cohort of English pupils completing compulsory education at the end of the 2002/03 academic year and their earnings by age 29/30, which is when most individuals are established in the labour market. The authors used the National Pupil data to select the full cohort of students completing secondary school in 2002/03 and the Individualised Learner Record register to collect destination data on students enrolled in post-16 education outside of schools and universities, mainly further education colleges. The authors then linked data to the register of students in universities supplied by the Higher Education Statistics Agency and finally information about annual earnings from income tax records provided by HMRC. All 622,000 English pupils from the 2002/03 academic year are tracked for the 14 years after leaving secondary education until they are aged 30.

31.8% of this studies’ cohort acquired Level 6 or above academic qualifications, while only 1.5% of this achieved a higher-level vocational qualification. In people’s early working lives, individuals with higher-level vocational qualifications showed higher earnings than degree holders. Individuals with higher-level vocational qualifications are more likely to work before or during their studies than degree holders, who tend to stay in full-time education until the end of their studies. However, at age 30, earnings for male degree holders that attended non-Russell group universities are similar to higher vocational/technical education, and higher for those from Russell group universities. Earnings for female degree holders are found to be higher regardless of the university type compared to those who achieved higher vocational/technical education. On average, individuals with a higher-level vocational STEM-related qualification earn more than their non-Russell group counterparts and earn similar in construction subjects to non-Russell Group and Russell Group individuals. However, for many other sectors, degree holders earn much higher on average than higher-level vocational qualifications.