Download presentation
Presentation is loading. Please wait.
Published byGage Gaskell Modified over 10 years ago
1
The Returns to Academic and Vocational Qualifications Steven McIntosh Department of Economics University of Sheffield
2
Introduction Work done for the Department for Education and Skills, who wanted: estimates of returns to qualifications to detailed qualifications estimates of how returns vary by prior qualifications estimates of age earnings profiles Published in Oxford Bulletin of Economics and Statistics, 2006.
3
Returns to Education OLS estimation of log-linear earnings function. Data – pooled QLFS producing annual data sets for 1996, 1998, 2000 and 2002.
4
Econometric Issues Coefficient on education can be biased due to: Omitted ability measures Omitted family background measures Measurement error on education variable Sample composition bias. Results suggest biases cancel out, leaving OLS a good estimate of true returns
5
Specification Issues Include all qualifications that individuals hold, not just highest qualification: Estimates based on all people who obtain the qualification Lack of common support with the no qualifications group No need to decide which is the highest qualification
6
Qualification1996199820002002 higher degree0.1130.0830.1310.129 (0.025)**(0.015)**(0.016)**(0.015)** first degree0.2340.2530.2490.258 (0.014)**(0.010)**(0.011)**(0.010)** other HE0.0900.0680.0900.060 (0.042)*(0.025)**(0.024)**(0.029)* HE diploma0.0710.0720.0600.074 (0.025)**(0.019)**(0.020)** 2+ A levels0.1630.1600.1450.142 (0.013)**(0.010)** The Returns to Academic Qualifications – All Full-Time Male Employees
7
Qualification1996199820002002 1 A level0.0950.0430.0610.041 (0.024)**(0.014)** (0.015)** A/S levels0.026-0.0480.035-0.043 (0.087)(0.044)(0.035)(0.034) 5+ GCSEs A*-C0.2720.2660.2740.246 (0.011)**(0.008)** 1-4 GCSEs A*-C0.1630.1620.1630.139 (0.010)**(0.007)**(0.008)** GCSEs D-F0.0910.0820.0630.061 (0.015)**(0.010)** (0.011)** The Returns to Academic Qualifications – All Full-Time Male Employees
8
Qualification1996199820002002 professional quals0.3260.3360.3650.413 (0.022)**(0.017)** (0.019)** teaching qualifications0.0490.0570.0710.094 (0.024)*(0.016)**(0.017)**(0.016)** nursing qualifications0.0710.0870.1140.078 (0.036)*(0.024)**(0.026)** HNC/HND0.1430.1540.1290.139 (0.014)**(0.009)** (0.010)** RSA higher0.0410.037-0.0340.003 (0.170)(0.069)(0.068)(0.040) ONC/OND0.1110.0890.1120.079 (0.013)**(0.010)** City & Guilds Ad. Craft0.0410.0670.0400.039 (0.014)**(0.009)** NVQ 3-50.0310.0570.027 (0.027)(0.014)**(0.011)* The Returns to Vocational Qualifications – All Full-Time Male Employees
9
Qualification1996199820002002 City & Guilds Craft0.0090.0750.0810.078 (0.016)(0.014)**(0.017)**(0.016)** BTEC diploma0.0940.0310.0520.045 (0.027)**(0.022)(0.023)* NVQ 2-0.068-0.066-0.081-0.088 (0.023)**(0.014)**(0.013)**(0.012)** City & Guilds other0.039-0.036-0.039-0.048 (0.014)**(0.012)**(0.015)**(0.014)** NVQ1-0.118-0.099-0.075-0.066 (0.041)**(0.025)**(0.019)**(0.020)** RSA lower-0.068-0.088-0.065-0.072 (0.030)*(0.019)**(0.022)**(0.020)** other0.0480.0540.0570.050 (0.007)**(0.005)** The Returns to Vocational Qualifications – All Full-Time Male Employees
10
The Returns to Academic Qualifications – All Full-Time Male Employees, by Highest School Qualification, 1996-2002 QualificationNo school quals GCSEs D-F 1-4 GCSEs A*-C 5+ GCSEs A*-C 1 A level2+ A levels higher degree0.2350.2780.1390.1540.1590.053 (0.040)**(0.110)*(0.045)**(0.036)**(0.055)**(0.009)** first degree0.3910.1240.1690.1500.1060.197 (0.026)**(0.054)*(0.020)**(0.013)**(0.023)**(0.007)** other HE0.1290.2850.1160.102-0.021 (0.038)**(0.082)**(0.032)**(0.028)**(0.065)(0.021) HE diploma0.2100.1760.0620.0670.044-0.025 (0.034)**(0.054)**(0.030)*(0.023)**(0.035)(0.014)
11
QualificationNo school quals GCSEs D-F1-4 GCSEs A*-C 5+ GCSEs A*-C 1 A level2+ A levels professional quals0.5720.4380.2600.2730.2320.291 (0.036)**(0.059)**(0.032)**(0.020)**(0.032)**(0.012)** teaching quals0.1290.0870.0570.0610.115-0.014 (0.044)**(0.088)(0.039)(0.025)*(0.029)**(0.010) nursing quals0.2640.1500.1290.0020.024-0.045 (0.030)**(0.084)(0.030)**(0.026)(0.046)(0.025) HNC/HND0.2620.2100.2030.1420.124-0.015 (0.015)**(0.031)**(0.010)**(0.008)**(0.017)**(0.010) RSA higher-0.0010.022-0.0590.062-0.030-0.157 (0.082)(0.150)(0.066)(0.092)(0.061)(0.069)* ONC/OND0.1520.1400.1380.0810.021-0.072 (0.016)**(0.026)**(0.009)**(0.008)**(0.021)(0.016)** C&G Ad.Craft0.0460.0210.065-0.029-0.069-0.182 (0.010)**(0.016)(0.008)**(0.010)**(0.038)(0.027)** NVQ 3-50.0680.0580.0600.034-0.001-0.102 (0.015)**(0.023)*(0.011)**(0.013)**(0.028)(0.020)** The Returns to Vocational Qualifications – All Full-Time Male Employees, by Highest School Qualification, 1996-2002
12
QualificationNo school quals GCSEs D-F 1-4 GCSEs A*-C 5+ GCSEs A*-C 1 A level2+ A levels City & Guilds Craft0.0700.0920.027-0.006 -0.040 (0.012)**(0.020)**(0.014)*(0.019)(0.054)(0.038) BTEC diploma0.0120.0620.0830.0390.059-0.067 (0.031)(0.037)(0.017)**(0.022)(0.050)(0.047) NVQ 2-0.083-0.025-0.039-0.091-0.158-0.193 (0.013)**(0.017)(0.012)**(0.015)**(0.040)**(0.028)** City & Guilds other0.032-0.002-0.005-0.049-0.160-0.153 (0.011)**(0.018)(0.012)(0.016)**(0.039)**(0.025)** NVQ1-0.085-0.074-0.092-0.148-0.059-0.150 (0.019)**(0.026)**(0.021)**(0.029)**(0.109)(0.042)** RSA lower0.009-0.053 -0.069-0.097-0.170 (0.023)(0.033)(0.018)**(0.022)**(0.048)*(0.026)** other0.0870.0160.0170.023 0.041 (0.005)**(0.009)(0.006)**(0.007)**(0.015)(0.006)** The Returns to Vocational Qualifications – All Full-Time Male Employees, by Highest School Qualification, 1996-2002
13
Estimating Age Earnings Profiles 1. Assume the wage differential is constant at all ages. 2. With a single cross-section, interact age with qualifications, to determine how differential varies - but cohort effects with age effects. 3. Use cohort data set to isolate pure age effect - but will be based on education received 50 years ago 4. Create pseudo cohorts in repeated cross section data, to follow one cohort for a number of years, while still looking at recent attainment for young people.
14
Estimating Age Earning Profiles – Pseudo Cohorts 1234567 199621-2526-3031-3536-4041-4546-5051-55 199722-2627-3132-3637-4142-4647-5152-56 199823-2728-3233-3738-4243-4748-5253-57 199924-2829-3334-3839-4344-4849-5354-58 200025-2930-3435-3940-4445-4950-5455-59 200126-3031-3536-4041-4546-5051-5556-60 200227-3132-3637-4142-4647-5152-5657-61
19
TABLE 4 Age and cohort effects in estimated returns Male degreeFemale degreeMale GCSEMale vocational level 3 age0.133 (0.041)*0.042 (0.011)*0.002 (0.007)0.008 (0.030) age 2 /100-0.304 (0.105)*-0.054 (0.014)*-0.005 (0.009)-0.012 (0.077) age 3 / 1000.002 (0.001)*-0.000 (0.001) cohort 2-0.052 (0.026)0.005 (0.025)0.065 (0.019)*0.004 (0.019) cohort 3-0.049 (0.036)0.019 (0.036)0.077 (0.028)*0.017 (0.026) cohort 4-0.067 (0.046)0.003 (0.045)0.132 (0.035)*0.046 (0.034) cohort 5-0.086 (0.057)0.012 (0.052)0.144 (0.041)*0.084 (0.042) cohort 6-0.079 (0.065)0.038 (0.062)0.181 (0.047)*0.130 (0.048)* cohort 7-0.138 (0.072)0.170 (0.054)*0.180 (0.052)* Constant-1.617 (0.516)*-0.544 (0.194)*0.168(0.135)-0.033(0.378) Obs494249 R-squared0.600.660.790.37
20
Conclusion A lot of information in the LFS with which to estimate returns to a detailed list of qualifications. Pseudo cohort approach can be useful in estimating lifetime returns, but only for qualifications that are held by large numbers of people.
Similar presentations
© 2025 SlidePlayer.com. Inc.
All rights reserved.