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Education pathways: Equality gaps in earnings and employment

The report sets out the results of analysis of the earnings and employment status of over a million people, from Key Stage 4 qualifications (for example GCSEs) to 16 years later. It found that students who pursue higher education qualifications earn more money and are more likely to be employed compared to peers with no qualifications beyond GCSEs.

It also found that graduates from ‘top third’ universities (the 52 universities with the highest tariff entry in the UK, meaning they are more selective) earn over £20,000 more than those who do no further study.

Graduates who undertake a higher education qualification at any type of provider are also more likely to be employed: 84% compared to 65% for those with no known qualification beyond GCSE level.

The findings paint a complex picture, but a consistent finding is that equality gaps remain, with key under-represented groups of students facing persistent barriers to an equitable education pathway.

Graph showing average earnings 16 years after KS4 by highest qualification. Key finding is that graduates from ‘top third’ universities earned over £20,000 more a year than those who did no further study beyond GCSEs.

Differences in earnings and employment outcomes for disadvantaged or under-represented groups

The report highlights that there is an earnings premium for disadvantaged students with a higher education qualification. However, a clear disadvantage earnings gap exists. Earnings are consistently higher among more advantaged students compared to students who were eligible for free school meals.

Men earn more than women across the full range of education pathways. Gender gaps in earnings are large, and larger than equivalent disadvantage or ethnicity gaps.

The analysis of earnings by ethnicity tells a more mixed story. After controlling for attainment and other demographics, the higher education earnings premium is higher for Asian, Mixed and Other graduates than for White graduates, but lower for Black graduates.

Graph showing percentage in employment 16 years after KS4 by highest qualification. Employment is nearly 20 percentage points higher for those with qualifications in higher education compared to those with no known qualification after KS4. Overall average employment is 73%.

Key findings and recommendations

  • There are variations in how different higher education qualifications increase earnings and the likelihood of being in employment, with the greatest economic returns being from earning a degree from a ‘top third’ university. 
  • Equality gaps remain whatever qualification people gain, particularly by free school meal status. This may suggest other factors explain or drive these gaps, and that education alone cannot address them, indicating that additional measures or policies will also be needed to address the wider drivers of inequalities in the labour market. 
  • Students from free school meal backgrounds have stronger labour market returns across every level of qualification. This indicates the importance of ensuring they have equal access to higher level qualifications, and that this should be a priority for social mobility. This will require addressing inequalities in prior attainment in schooling. 
  • Some Level 5 and 6 qualifications in further education colleges generate strong employment and earnings premiums. However, the supply of Level 5 and 6 qualifications in further education colleges is relatively low. Policymakers should understand the drivers of these positive outcomes and consider if or how their provision could be expanded while still retaining their earnings premiums.
  • This report focuses on the economic returns of educational qualifications, but higher education has other individual and societal benefits. There is a case for providing further information and guidance for those considering higher education, to ensure they are better informed about the labour market as well as other benefits that flow from higher education qualifications.

Data limitations

The analysis in the report was based on a large person-level longitudinal dataset which was constructed from National Pupil Database, Individualised Learner Record, Higher Education Statistics Agency and Longitudinal Education Outcomes data. 

Due to limitations with the Longitudinal Education Outcomes data, the earnings data reports PAYE earnings only, not earnings declared by those who are self-employed. The data also did not allow researchers to identify whether employment is full-time or part-time. There are additional factors, such as sector of employment or subject of degree, that were not included in this analysis but are likely to influence labour market outcomes.

The report only addresses the question of labour market outcomes from higher education. It does not address the wider individual and societal benefits of attending higher education.