By Michael Shattock

In April 2016 the IFS published its long awaited Working Paper (W16/06): ‘How English domiciled graduate earnings vary with gender, institution attended, subject and socio-economic background’ authored by Britton, J, Dearden, L, Shephard, N and Vignoles, A. The research and its findings are likely to be immensely influential in the UK and probably internationally, both in higher education studies and in respect to policy.

A month later the UK Government published its White Paper, Success as a Knowledge Economy: Teaching Excellence, Social Mobility and Student Choice Department of Business, Innovation and Skills, May 2016, Cm 9258 which made several references to the Working Paper’s findings and confirmed that they were ‘at the heart of delivering our reform agenda’(para 34).

The originality of the IFS paper lies primarily in the methodology adopted to offer data on the earning levels of English graduates 10 years from graduation and the precision which it gives to analysing  it against a given set of variables. Hitherto, economists have been able, using rate of return analysis, to calculate the value of degree study as against non-entry to higher education but the absence of national data, apart from the notoriously suspect employment data collected by careers offices six months after graduation, has proved to be a severe limitation on any assessment of the employment outcomes of UK higher education. What the IFS paper has done is to link income tax data on earnings with data on parental occupations, pre-university academic performance and individual institution and course attended. The authors are quick to point to limitations of their data but the advance over what has previously been available is transformational. In sum, they are able to show earnings 10 years from graduation by gender, course studied and institution attended, parental socio-economic background, qualifications at entry and regional origins. This offers a whole new platform for an analysis of English higher education.

This is not the place to summarise all the paper’s findings and the following are listed simply to give a flavour of the field which is now opened up:

1. Research on social inequality in higher education has tended to concentrate on the Robbins pool of ability argument and on how to widen access, the broad assumption being that higher education, once entered, provides a level playing figure for further progress. What the paper demonstrates, however, is that inequalities persist: graduates from high income families earning median level incomes for their group earn 25% more than the median level for graduates from low income families; graduates from high income families whose earnings fall into a higher percentile earn up to 60% for men and 45% for women more than graduates from low income backgrounds.
2. The data shows considerable disparity between the earnings of graduates following different disciplines: medicine and economics stand out for high earnings with their high premiums also affected by the effect on salaries of attendance at high prestige institutions; Creative Arts graduates have very low earnings by comparison—the top 10% of economics earners in the 1999 intake earned in excess of £120k 10 years after graduation while the parallel group of Creative Arts graduates earned less than £40k.
3. Regional differences play a significant role: students domiciled in the South East and the East Midlands have a higher than average rate of attendance at top rated institutions while the rate is much lower from students domiciled in the North West; 75% of students domiciled in the North East attended an institution in the North East.
4. While there is a premium on future earnings from attending a top ranked (Russell Group) university the median salaries from 23 institutions (men) and nine institutions (women) were lower than the median salaries for non-graduates.

The aim of the Working Paper is stated to be to improve understanding of the diversity of the sector and its central focus is to expose the variability of graduates’ earning power and what it means for social mobility. The paper does not make judgements and where it presents data which could be interpreted detrimentally it offers contextual explanations which illustrate the complexity of the picture which the data present and the dangers of  drawing easy headline conclusions. Much of the data confirms what commonsense  and a knowledge of the sector has known, but not been able to prove, for some time but herein lies the risk of a rush to judgement. It is not surprising that some universities’ graduates are earning less than the national median earnings level for non-graduates  because these universities attract a very high proportion of local students domiciled in low wage areas in which they continue to live after graduation.  Equally if one knows anything about the erratic careers of actors, dancers, artists and sculptures one will not be surprised at the level of their earnings. This should not prejudice the funding of courses in the Creative Arts which, perhaps in only a minority of individual cases, will produce graduates who will go on to make the highest levels of cultural contribution.

But there is no doubt, particularly in a predominately neoliberal climate, that this research supplies the methodological tools for some very uncomfortable policy outcomes. The White Paper makes it clear that the Government intends to follow up the Working Paper’s findings and to use the data derived from tax returns and the other sources drawn on by the paper to assist in the formulation of policy. It is not difficult to see where that might lead in the hands of policy makers driven by concerns about efficiency and value for money. These research findings add a dimension to our understanding of the higher education scene but the value to society goes well beyond metrics derived from graduate earnings. Where such metrics suggest policy interventions the research community must insist, before decisions are taken, that they are subject to contextual examination. The IFS Working Paper’s methodology and findings are not the end of the story but open up a cornucopia of new avenues for research in diversity and inequality within the sector. We have to guard against policy decisions based on crude simplifications which ignore related complex social, economic, cultural and intellectual factors which bear on the picture which the headline metric appears to describe..

SRHE Fellow Michael Shattock  is a Visiting Professor in the Centre for Higher Education Studies in the UCL Institute of Education, London.