New research at the Institute for Fiscal Studies (IFS),
commissioned by the Department for Education, examines the
financial benefit associated with different degree
classifications. Even after controlling for student
characteristics, higher degree classes are associated with
substantially higher earnings:
- The average premium for gaining a first class degree over an
upper second (2.1) is 4% for women and 7% for men.
- The penalty for getting a lower second (2.2) as opposed to a
2.1 is 7% lower earnings for women and 11% lower earnings for
men.
- Obtaining a lower class (below 2.2) degree is associated with
15% lower earnings for women and 18% lower earnings for men,
again compared with a 2.1.
For the first time, using detailed administrative data from the
Department for Education’s Longitudinal Education Outcomes (LEO)
dataset, we have also been able to investigate how the age 30
earnings premiums from achieving higher degree classifications
vary by subject and university selectivity.
Degree class seems to matter most for those attending the
most selective universities and studying subjects where future
earnings are highest. This suggests that access to
‘elite jobs’ is governed by what you study, where you study
and how well you do at university.
Other key findings include:
-
Payoffs for a higher class degree vary hugely by
subject. For some subjects, degree class matters a lot for
earnings, while for others it appears not to matter at
all. For men and women studying law or economics,
getting a 2.2 rather than a 2.1 is associated with more than
15% lower earnings, whereas there is no significant difference
for those studying education or English.
-
Achieving at least a 2.1 has a much bigger payoff at
more selective universities. Controlling for
observable characteristics, both men and women who obtain a 2.2
from the most selective universities (Oxford, Cambridge,
Imperial College London and the London School of Economics)
earn 20% less on average at age 30 than those who achieve a
2.1, compared with around 6% for women and 8% for men who got
lower second class degrees from the least selective
universities.
-
There are stark gender differences in the payoff to
achieving a first class degree at a very selective
university. At the most selective universities, the
average payoff to a first class degree versus a 2.1 is near
zero for women, but very large at around 14% for men. This
suggests that fewer high-achieving women go on to high-earning
careers.
-
Despite a significant, long-term trend towards higher
degree classes awarded in all subjects and at all levels of
university selectivity, we do not find large changes in degree
class premiums over time.This is consistent with
students engaging more successfully with the material they are
being taught, but could also be explained by changes in
institutions’ assessment practices resulting in a general
lowering of academic standards. Very large increases in the
proportion of higher degree classes in recent years may lead to
changes in degree class premiums for the most recent graduates.
But given their age, we cannot look directly at this yet.
Jack Britton, Associate Director at IFS, Reader at the
University of York and a co-author of the report, said:
‘This report provides useful information to students about the
likely financial rewards to performing well in their degrees.
Across all degrees, the gap in earnings between getting a 2.1 and
getting a 2.2 is much more important than the gap between getting
a first and getting a 2.1. In fact, for many subjects, the
difference between a first and a 2.1 is inconsequential for
earnings. However, for others, such as economics, law, business,
computing and pharmacology, it is substantial.’
Ben Waltmann, Senior Research Economist at IFS and a
co-author of the report, said:
‘The findings imply that degree classification may matter as much
as university attended for later life earnings. Other things
equal, going to a more selective university is good for future
earnings, and the fact that few students from disadvantaged
backgrounds attend the most selective universities is a barrier
to social mobility. But that being said, many graduates who get a
2.2 from a highly selective university might have got a
higher-paying job had they attended a slightly less selective
university and got a 2.1. Prospective students, parents and
policymakers should take note.’
ENDS
Notes to Editors
This report was commissioned by the Department for
Education.
