The impact of undergraduate degrees on early-career earnings


This report uses the new Longitudinal Educational Outcomes (LEO) administrative dataset to provide the latest estimates of the impact of Higher Education (HE) on individuals’ early-career earnings after accounting for individuals’ pre-university characteristics. This will provide vital evidence for prospective students choosing whether, where and what to study at university. The Institute for Fiscal Studies estimates the overall average impact of attending HE on earnings at age 29, and show how this varies for individuals studying different degree subjects or at different Higher Education Institutions (HEIs), based on those who went to HE in the mid- to late-2000s.

It also investigates how these returns might differ for students with different prior attainment, based on their GCSE results and whether or not they studied a maths or science (‘STEM’) A-level. This report focuses on those who start HE, rather than just on HE graduates, as this is the relevant decision facing prospective students. This is the second in a series of reports by the Institute for Fiscal Studies, commissioned by the Department for Education (DfE), that makes use of the LEO dataset to improve information on the value of HE degrees. The dataset, developed in collaboration with the DfE, tracks English students through school, college, university and into the labour market.

This report, for the first time, uses the dataset to compare individuals who went to HE to those with similar background characteristics who did not. All of our estimates (unless otherwise stated) report the effect of attending HE at age 18 on annual gross earnings at age 29, conditional on being in “sustained employment”. It compares our HE students with those who did not go to HE but had at least five A*-C GCSEs, controlling for differences in prior attainment, Key Stage 5 subject choices and family background. This pioneering dataset enables us to account for many of the differences between those who do and do not attend HE, but there are many other factors which may affect this decision that are not accounted for, such as passion or preferences. Also these estimates focus on the monetary returns to university, which may not fully reflect the wider society benefits of these degrees. As such, some caution should be executed when interpreting these findings.

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