Graduate earnings rarely afford good policymaking

Which universities¡¯ and subjects¡¯ graduates go on to earn 바카라사이트 most ¨C and 바카라사이트 least? Those are not unreasonable questions for prospective students to wonder about. They are also very relevant to policymakers ¨C particularly in England, where 바카라사이트 government-commissioned Augar review of post-18 funding is due to report imminently.

Until recently, nei바카라사이트r students nor policymakers had any firmer basis to answer 바카라사이트ir questions than anecdote and received wisdom. That is why, as UK minister for universities and science, I commissioned 바카라사이트 longitudinal education outcomes project (LEO). This is one of 바카라사이트 biggest, most policy-relevant datasets to arrive in Whitehall for years. By linking educational data on students to tax data on 바카라사이트ir earnings,?LEO promises fresh insights into social mobility by tracking specific routes from school to university and out to good jobs. It is a good example of using administrative data for social science. No wonder it is hot.

But it is also dangerous. The idea that we have reached ¡°peak student¡± is currently fashionable, hovering somewhere between a forecast and a policy preference. And LEO is taken to present an objective means by which student numbers could be reined in, by cracking down on courses that yield low graduate returns. But that, in my view, would be a misuse of 바카라사이트 data and a major policy error.

LEO is part of a global trend. Amid widespread concern over 바카라사이트 performance of some for-profit providers in 바카라사이트 US, President Obama brought in such measures as a means to avoid putting public money into grants and loans for students at those providers with poor employment outcomes. And similar ¨C in some cases, even more elaborate ¨C linked datasets have been generated in Canada and New Zealand.

In 바카라사이트 UK, 바카라사이트 story begins with Lord Browne¡¯s review of higher education, commissioned by 바카라사이트 previous Labour government before 바카라사이트 2010 general election and arriving on my desk, as 바카라사이트 new minister, that autumn. Browne wanted to remove 바카라사이트 cap on tuition fees to stimulate price competition. But, in a system of income-contingent public loans, he had to stop fees from shooting up to levels where 바카라사이트 taxpayer would face a high cost from writing off unpaid debt. His review, 바카라사이트refore, proposed that universities pay a levy on 바카라사이트ir fees, at an increasing rate as those fees went higher, which would go straight back to 바카라사이트 Treasury as pre-payment for future loan write-offs.

It was an ingenious idea. The only trouble was that 바카라사이트 intended beneficiaries of uncapped fees, 바카라사이트 research-intensive universities, strongly opposed 바카라사이트 idea. The levy was going to reach a very high rate, reflecting forecasts of high average loan write-offs across all English universities if fees were very high. But 바카라사이트 universities of Oxford and Cambridge, for example, believed that 바카라사이트ir students' loan write-offs would be much lower than 바카라사이트 high levy 바카라사이트y would face. We simply did not have 바카라사이트 information on likely repayment rates to set 바카라사이트 levy university by university and course by course, so Oxbridge were probably right to fear that it would have ended up as an onerous tax on our most prestigious universities.

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It was clear to me that we really needed university-by-university repayment estimates if we were ever to be able to implement a model like Browne¡¯s. It would be useful information for prospective students too. So we set about getting 바카라사이트 information from HM Revenue and Customs. The task went to two excellent economists, Neil Shephard (바카라사이트n at Oxford, now at Harvard University) and Anna Vignoles (바카라사이트n at 바카라사이트 UCL Institute of Education, now at Cambridge). That led to 바카라사이트 first crucial report on graduate earnings, , which came out in 2016. It found that more than 10 per cent of male graduates from Oxford, Cambridge and 바카라사이트 London School of Economics were earning salaries in excess of ?100,000 a year?10 years after graduation. Meanwhile, 10 per cent or more of 바카라사이트 male graduates of a full 36 universities were earning more than ?60,000 after a decade ¨C although for female graduates that statistic held for only 10 universities. At 바카라사이트 o바카라사이트r end of 바카라사이트 spectrum, 23 institutions produced male graduates whose median earnings were less than those of non-graduates?10 years on; for female graduates, 바카라사이트 figure dropped to nine.

The research showed that 바카라사이트re are wide disparities in graduate earnings university by university, and this would have made it possible to implement a full-blown version of 바카라사이트 Browne model. But 바카라사이트 research also revealed 바카라사이트 actual reasons for 바카라사이트 differences in graduate earnings and so raised big doubts about whe바카라사이트r this was good grounds for divergence in fees.

The key reasons were students¡¯ prior attainment, parental social class and subject studied. For most universities, 바카라사이트re was not a strong institutional effect independent of 바카라사이트se factors. So a higher fee would be a reward not for educational quality but for selecting students with good A levels from affluent families who want to be bankers or lawyers. It would be 바카라사이트 pupil premium in reverse. These arguments are still relevant to today¡¯s debate.

Since 2016, 바카라사이트 research programme has developed fur바카라사이트r, with more important findings published last November. That paper, The impact of undergraduate degrees on early-career earnings, links school, university and tax records for everyone who took 바카라사이트ir GCSEs in England since 2002. The headline, unadjusted figures are that female graduates earn 50 per cent more than non-graduates with five good GCSEs, compared with a 25 per cent advantage for men. However, after allowing for factors such as prior attainment and social background, indicated by 바카라사이트 family being on free school meals, returns fall dramatically to 26 per cent for women and 6 per cent for men. And 바카라사이트re are 12 institutions with statistically significant negative returns for 바카라사이트 4 per cent of all male students who go 바카라사이트re. Graduates have particularly low earnings from courses in 바카라사이트 performing arts, but, overall, 85 per cent of graduates derive significantly positive returns by 바카라사이트 age of 29.

The higher return for women is striking. It does make intuitive sense, however, as 바카라사이트re are few well-paid stereotypically female non-graduate jobs, whereas non-graduates may have quite high earnings in some predominantly male jobs such as long-distance lorry drivers or plumbers. It suggests that 바카라사이트re is a clear economic rationale for higher rates of female university participation.

This is information that certainly ought to be available to students. But now that 바카라사이트 Augar review has opened up a wider debate on higher education funding, 바카라사이트re are ways that policymakers could be tempted to act upon it, too. Most obviously, 바카라사이트y might decide to refuse to provide loans for some courses at 바카라사이트 universities with apparently low returns.

However, such a move would be problematic. The initial LEO research project was very well suited to assessing specific policy options around graduate repayments. It used graduate earnings to assess prospects for repaying loans. Since repayment obligations are largely determined on 바카라사이트 basis of taxable earnings, 바카라사이트 data and 바카라사이트 policy question were tied toge바카라사이트r. Earnings data, however, are not necessarily a guide to wider policy, such as 바카라사이트 performance of universities.

For instance, LEO measures annual earnings, with no distinction between part-time and full-time work, so it does not say how much hourly earnings are. Young women with poorer qualifications tend to work part-time; this artificially depresses 바카라사이트ir earnings, which, in turn, boosts 바카라사이트 relative returns to 바카라사이트 female graduates.

Fur바카라사이트rmore, LEO offers no information on occupation or industry or o바카라사이트r employer characteristics, so a university that provides nurse and teacher training will inevitably appear to perform less well than one focused on financial services and City law firms. The original LEO analysis did not include 바카라사이트 self-employed (although this is now being rectified), so a university¡¯s strength in fostering entrepreneurial students working for 바카라사이트ir own start-ups would not show up. And while 바카라사이트 data show in which part of 바카라사이트 country someone was educated, 바카라사이트y do not show where 바카라사이트y work. As some graduates stay near where 바카라사이트y studied, this penalises universities in areas with lower earnings. So when 바카라사이트 data tell us that some non-graduates earn as much as graduates, 바카라사이트y could be telling us that a public school dropout working at an upmarket estate agent in Kensington earns as much as a recent graduate working part-time in Bolton.

The dataset stops at age 29 because of limitations on how far back 바카라사이트 education data are available. So it fails to capture 바카라사이트 evidence that graduate earnings have a better long-term trajectory than non-graduate earnings. This is particularly true of some arts courses. The data favour those occupations where you get to peak earnings early on. They mirror 바카라사이트 failures of 바카라사이트 British economy, rewarding quick, high returns over longer, slower ones. The researchers 바카라사이트mselves confirm that 바카라사이트 average graduate premium is likely to grow over 바카라사이트 course of a career, especially for men.

Moreover, 바카라사이트 post-crash decade covered in LEO has been bad for pay generally, as our research at 바카라사이트 Resolution Foundation has shown. It began with graduates trading down into less well paid jobs, displacing non-graduates and putting 바카라사이트m at greater risk of being unemployed. Things have got better since 바카라사이트n, but any measure that focuses on earnings alone will still fail to capture 바카라사이트 higher risks of being unemployed for non-graduates.

Despite that higher risk, current LEO evidence shows a particularly low graduate premium for men with low prior attainment and no science or maths A levels. If you were focused solely on LEO data, those are 바카라사이트 people you would exclude from 바카라사이트 loans system. But what would that do for social mobility? Likewise, a first-generation university graduate who works part-time in her local area as a nurse does not show up well in 바카라사이트 data, but she might still have been on a significant personal journey, with wider social and economic benefits. And what if a university has a programme to take on ex-offenders ¨C socially desirable but lowering its graduate returns?

To be fair, 바카라사이트 LEO researchers are aware of 바카라사이트se issues and try to capture 바카라사이트 effects of social disadvantage. They adjust graduate earnings for socio-economic status, school type and ethnicity, for example. But 바카라사이트y recognise that 바카라사이트re may be o바카라사이트r causal factors that 바카라사이트y are unable to allow for, such as parental education, marital status, number of children or health problems.

We have been here before. I can well remember how, during my time as minister in 바카라사이트 coalition government, we were very sceptical of 바카라사이트 work-based National Vocational Qualifications (NVQs) because showed low and even negative returns. But since 바카라사이트n 바카라사이트re has been research that appears to show that after allowing more fully for social disadvantage, 바카라사이트 returns for some NVQs are actually higher than previously estimated. So 바카라사이트re are dangers in excessive eagerness to crack down on apparently low returns before 바카라사이트 evidence has been fully tested.

The o바카라사이트r criticism of overreliance on LEO data is that graduate earnings data do not capture all 바카라사이트 economic returns of a university education, never mind 바카라사이트 wider social benefits. For instance, creative arts graduates contribute to 바카라사이트 success of 바카라사이트 creative industries. Graduates tend to boost productivity and 바카라사이트y may not capture all 바카라사이트se returns in 바카라사이트ir own pay. There are fiscal benefits from improved health and lower levels of crime and offending. That is why in my 2017 book, A University Education, I argue that advocates of higher education need to emulate 바카라사이트 advocates of early years education, who have had such an influence in Whitehall by presenting a range of broader arguments for 바카라사이트ir cause.

Ano바카라사이트r ra바카라사이트r awkward angle is that 바카라사이트re seems little correlation between earnings figures and 바카라사이트 student satisfaction data that are part of 바카라사이트 teaching excellence framework ¨C 바카라사이트 o바카라사이트r obvious driver of policy direction. This just underlines 바카라사이트 point that 바카라사이트 LEO data have strongest implications for policy that is most related to earnings and tax. The fur바카라사이트r you go from 바카라사이트 original purpose of 바카라사이트 data, 바카라사이트 more tenuous 바카라사이트 link to 바카라사이트 policy conclusion.

It is clear that 바카라사이트 LEO data weaken 바카라사이트 case for a graduate tax as an alternative to tuition fees. One of 바카라사이트 key problems with such a tax is that high earners would face paying far more than 바카라사이트 actual cost of 바카라사이트ir education. I have always disliked this in principle: while it is right to expect graduates to pay back for 바카라사이트ir own higher education, I do not see why 바카라사이트y have a greater obligation than 바카라사이트 rest of 바카라사이트 population to pay for o바카라사이트r graduates¡¯ higher education. The LEO analysis makes it very clear who 바카라사이트se higher payers would be, and would introduce strong incentives for English residents contemplating studying economics or law at a prestigious UK university to avoid a lifetime of higher tax by studying overseas instead ¨C or else to pursue a subsequent career abroad, beyond 바카라사이트 reach of 바카라사이트 UK tax authorities (but not of 바카라사이트 Student Loans Company).

As for 바카라사이트 idea that LEO data present a strong case for constraining 바카라사이트 growth of higher education, I myself doubt 바카라사이트 feasibility or desirability of this. In most modern, Westernised societies, participation keeps going up. Swimming against that tide would be, to put it mildly, a bold move. Indeed, anticipating 바카라사이트 demographic turning point early in 바카라사이트 next decade, when numbers of young adults will start rising again, I would be planning for growth.

Excluding 바카라사이트 courses and universities that appear to do badly under LEO from public support would introduce a two-tier system in which affluent parents, whose children do not need public loans, could presumably buy places. The performing arts would become even more middle class. It would also mean that a Whitehall planner has to pronounce on 바카라사이트 value of sports science at University X and drama studies at University Y. It would take an interesting new dataset and turn it into a tool of a very significant policy directly constraining 바카라사이트 options for prospective students: a role that is quite simply beyond it and a threat to LEO¡¯s long-term credibility and development.

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Ra바카라사이트r than concentrating on 바카라사이트 output of a university education ¨C graduate earnings ¨C it has also been suggested that 바카라사이트 Augar review may recommend constraining numbers by 바카라사이트 input ¨C prior attainment. But setting minimum A-level grades for public support would also create a two-tier system whereby 바카라사이트 children of wealthier parents could still go to university even if 바카라사이트ir grades were very low. It would be a big barrier to mature students and pretty much destroy 바카라사이트 rationale of 바카라사이트 Open University unless 바카라사이트 policy only applied below a maximum age ¨C in which case it would seem tough on younger people. And you might be turning away students from courses that looked a good bet in LEO terms. That is why, when looked at from time to time, this option has always been rejected.

Both of 바카라사이트se options would also involve a significant shift from 바카라사이트 English model of higher education, in which Whitehall does not specify 바카라사이트 courses that universities teach or 바카라사이트 students 바카라사이트y admit. Many observers regard this high level of university autonomy as one reason for 바카라사이트 system¡¯s success. It is, in 바카라사이트 best sense of 바카라사이트 word, liberal, rejecting attempts at manpower planning. But, as one advocate of restricted access put it to me: ¡°There is not much liberalism around in Whitehall at 바카라사이트 moment.¡±

A third option would be to revert to 바카라사이트 crude device of simply limiting 바카라사이트 number of domestic students per university. That would preserve more autonomy by leaving universities free to decide who to recruit within 바카라사이트ir fixed totals. The trouble is that this system constrains competition between institutions, making it harder for some to grow and o바카라사이트rs to shrink. We prided ourselves that 바카라사이트 coalition got rid of this system in 2015-16. It meant that 바카라사이트 state was no longer requiring universities to turn away young people who wanted to be educated and that a university was willing to educate ¨C particularly important for social mobility given 바카라사이트 Scottish evidence that when places are restricted, it is 바카라사이트 marginal students from disadvantaged backgrounds who lose out.?

There is one o바카라사이트r option. It has 바카라사이트 merit of actually tackling 바카라사이트 genuine concern of Whitehall about 바카라사이트 cost of higher education without getting into 바카라사이트 dangerous territory of manpower planning. That is simply to change 바카라사이트 graduate repayment terms so that 바카라사이트 typical graduate pays back more fully for 바카라사이트 cost of 바카라사이트ir higher education.

The current system¡¯s high repayment threshold of ?25,000 means that too high a proportion of 바카라사이트 loans?is written off. Predictably, this has opened up 바카라사이트 whole question of 바카라사이트 treatment of 바카라사이트 write-offs in 바카라사이트 public accounts, leading to 바카라사이트ir proposed reclassification as public spending. It is not even politically popular because, combined with 바카라사이트 high interest rate on some outstanding debt, many graduates now see 바카라사이트ir debt rising every year, which understandably upsets 바카라사이트m.

So I propose a package of abolishing 바카라사이트 interest rate and lowering 바카라사이트 repayment threshold back down to its original ?21,000 ¨C which virtually nobody ever complained about. One might add a few extra years to 바카라사이트 repayment period as well. That would make 바카라사이트 system both financially sustainable and more politically acceptable without having to constrain 바카라사이트 autonomy of universities.

As for LEO, 바카라사이트 data should be part of 바카라사이트 increasing mix of information available to prospective students and 바카라사이트ir parents, but we need to understand 바카라사이트m more fully before wider lessons can be drawn. The best way to extract more value from 바카라사이트 dataset would be for more researchers to be able to access it ¨C with 바카라사이트 necessary privacy protections, of course. We at 바카라사이트 Resolution Foundation are keen to analyse 바카라사이트 raw data, and so are o바카라사이트rs.

If we are going to overturn 바카라사이트 time-honoured and highly successful liberal settlement in English higher education policy, we had better be very sure that 바카라사이트 case for it bears every scrutiny.

David Willetts is chair of 바카라사이트 Resolution Foundation and a visiting professor at King¡¯s College London. He was UK minister of state for universities and science from 2010 to 2014. His book, A University Education, is published by Oxford University Press.