Graduates: Income

Business, Innovation and Skills written question – answered on 24th November 2010.

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Photo of Jonathan Reynolds Jonathan Reynolds Opposition Assistant Whip (Commons)

To ask the Secretary of State for Business, Innovation and Skills what estimate his Department has made of the average additional lifetime earnings of higher education graduates; when this figure was most recently calculated; and how many students were in higher education at that time.

Photo of David Willetts David Willetts Minister of State (Universities and Science)

The Department draws on various estimates of the lifetime earnings benefits for degree holders, arising from both external and internal analysis. Generally they all estimate the lifetime earnings benefits of having a first degree over and above two or more A-levels (the 'graduate premium').

These estimates indicate that first degree graduates can expect to earn, on average, over £100,000 more over their working life, in today's values and net of taxes, than similar individuals who stop their education with two or more A-levels

This is for the average graduate, and the actual position for any individual will vary around this average.

There have been several calculations of the graduate premium in recent years, using data from different time periods and/or slightly different methods, though they have all used data from the Labour Force Survey (LFS-a sample survey) and the broad approach is consistent. These have all come to similar conclusions, albeit with slightly different estimates, which is why it is generally not expressed as a single figure but rather as a range or being above a certain value.

Some of the estimates are noted as follows, along with an indication of the data periods used for each one:

LFS data period Graduate premium estimate Source
1994-2002 Net males: £142,000 (1)Sloane and O'Leary, 2005
Net females: £158,000
2000-05 Gross: £160,000 (2)PWC, 2007
(Net c.£110,000-£120,000)
2004-07 Net £120,000 DIUS internal, 2008
(1) "The Return to a University Education in Great Britain, O'Leary, N.C. and P.J. Sloane (2005), National Institute Economic Review, No. 193; pp 75-89.

(2) "The Economic Benefits of a degree", UUK/PWC, February 2007.

http://www.universitiesuk.ac.uk/Publications/Documents/research-gradprem.pdf

The number of students in higher education for each academic year since 1999/2000 was as follows:

All HE students Undergraduate only
UK HEIs English HEIs UK HEIs English HEIs
1999/2000 1,856,330 1,540,610 1,447,710 1,198,330
2000/01 1,990,625 1,656,700 1,541,925 1,278,895
2001/02 2,086,075 1,726,840 1,616,225 1,334,510
2002/03 2,175,115 1,807,660 1,677,615 1,390,915
2003/04 2,247,440 1,868,415 1,723,615 1,428,430
2004/05 2,287,540 1,895,825 1,754,910 1,448,380
2005/06 2,336,110 1,936,420 1,790,740 1,481,985
2006/07 2,362,815 1,957,190 1,803,425 1,494,760
2007/08 2,306,105 1,922,180 1,804,970 1,505,015
2008/09 2,396,050 2,005,840 1,859,240 1,556,525
Source:

HESA data. All: modes of study, levels of study, domiciles. http://www. hesa.ac.uk/index.php/component/option.com_datatables/ltemid,121/task,show_category/catdex,3/#institution

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