Graduate Earnings Guided By Parents' Wealth, Institute For Fiscal Studies Report Finds

Money breeds money.
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Graduates from well off families earn significantly more after leaving university than students from poorer backgrounds, a huge new study has found.

The average gap in earnings between students from wealthy households and others was on average £8,000 for men, ten years after graduation.

And in almost every degree subject, men earned more a decade into their careers than women, the research found.

HuffPost UK

For the first time researchers from the Institute for Fiscal Studies, University College London, Harvard and Cambridge used anonymised tax data and student loan records of 260,000 students.

The data spans up to ten years after students graduated after beginning higher education between 1998 and 2011.

The study found men earned a median salary of around £30,000, while women earned £27,000.

Just language and literature subjects saw women earn more.

“Those studying medicine and economics earned more than others”


In addition to a graduate's background and gender, the study found a difference in earnings across subject and institution.

Those studying medicine and economics were found to earn significantly more than those reading other subjects.

Medical graduates earned a median wage of around £50,000 for men and around £45,000 for women after ten years.

Meanwhile at the other end of the scale, those studying creative arts subjects earned a median wage of £17,900 for men and £14,500 for women.

How did researchers determine a graduate's background?

Using information from the 2012/13 tax year, researchers were able to establish how much graduates earned when compared with the amount of student loan borrowed.

Since student loans are in part determined by parental income, the lower the level of student loan, the higher the income will have been.

Although the researchers admit this analysis may not be fool proof.

There are particularly big differences in graduates’ earnings from different universities, in large part driven by differences in entry requirements, the researchers said.

Top ranking universities propelled a sizable proportion of their male graduates to earn above £100,000.

While graduates from as many as 23 universities earned a lower median wage than non-graduates a decade after graduation.

The study also confirmed that graduates are much more likely to be in work, and earn considerably more than non-graduates.

Male graduates earned around £8,000 more than non-graduates of the same age, while women earned £9,000 more.

“It’s hugely disappointing to see women and poorer graduates are facing such a massive disadvantage in the workplace.”

- Megan Dunn, NUS president

Megan Dunn, National Union of Students president, said: "This study shows so much more work has to be done to create equal opportunities for students. It’s hugely disappointing to see women and poorer graduates are facing such a massive disadvantage in the workplace.

"The marketisation of education is failing students and graduates. NUS has always demanded social justice be at the forefront of education policy and we will continue to support students from lower income backgrounds and campaign to close the gender pay gap."

“Students need to realise that their subject choice is important”

- Anna Vignoles, University of Cambridge

Anna Vignoles of the University of Cambridge, and co-author of the paper, said: "The research illustrates strongly that for most graduates, higher education leads to much better earnings than those earned by non-graduates, although students need to realise that their subject choice is important in determining how much of an earnings advantage they will have."

Jack Britton, a research economist at the IFS and another author of the paper, said: "This work shows that the advantages of coming from a high-income family persist for graduates right into the labour market at age 30."

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