Comments on: What’s going on with graduate earnings?

By: Elmer Athol

Elmer Athol — Wed, 15 Aug 2007 07:07:13 +0000

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By: Andrew Norton

Andrew Norton — Sun, 17 Sep 2006 22:17:40 +0000

Harry - According to the survey conducted by Graduate Careers Australia a few months after course completion, the median (they do not provide the average) starting salary for graduates went up $20 a week in real terms between 2001 and 2005 ($ 2005). By contrast, the ABS stats indicate that for bachelor degree holders overall average wages went up by $4 a week. I did not say they were falling overall, just that their growth was very slow compared to other groups.

By: Geoff R

Geoff R — Sun, 17 Sep 2006 10:26:45 +0000

Frederic Pryor (Who’s not working and why (1999)) argues that in the US there has been downward mobility with university graduates with lower cognitive skills taking jobs from the high school educated whilst university graduates with higher cognitive skills are benefitting from economic change.

By: hc

hc — Fri, 15 Sep 2006 23:24:07 +0000

I thought your argument was that the premium for graduates was lower. Do you have evidence that starting salaries have remained high but average incomes for graduates have fallen? I’d be surprised.

By: Andrew Norton

Andrew Norton — Fri, 15 Sep 2006 20:37:53 +0000

Harry - I can see the theory behind your point about the quality of u/g education, but if there is lower quality it does not seem to be reflected yet in starting salaries. So if you are right, employers after observation are less likely to award pay increases.

JC - I’m not sure that it matters for the argument why US wages are low for unskilled people; the simple fact that they are will encourage people to seek further education despite the initial cost.

By: hc

hc — Fri, 15 Sep 2006 16:39:48 +0000

Its difficult over such a short-term period to make a judgement. The 2% figure in growth of employed graduates sounds high to me over such a short term period - this might alone account for the lid on earnings.

I also think the quality of undergraduate education is deteriorating - rising class sizes, fewer essays, vastly increased prevalence of intrusive part-time work while studying etc will increasingly mean the ‘human capital’ investment decisions (I prefer ‘education’) yield lower returns.

Students are getting an increasingly shoddy deal from the Australian Universities.

By: JC

JC — Fri, 15 Sep 2006 13:04:13 +0000

Andrew you mentioned the US stats. I really don’t think the US is a very good comparison for one prime reason. US wages at the bottom rungs of the ladder are pulled down by the high levels of illegal immigration. There are approx 11 million low skilled illegal workers in the US. This has a very big effect on wages for the low skilled American

By: Andrew Norton

Andrew Norton — Fri, 15 Sep 2006 01:23:38 +0000

Robyn - Gender is probably a factor, though I will need to check to what extent female-majorities among graduates are affecting the full-time workforce - full-time female labour force participation has not increased that much over time.

Conrad - Some of this could just be signalling, ie employers take p/g qualifications as a reasonable proxy for higher ability or other qualities they value, and potential employees respond. In the Education and Training survey there was a question about why a course was undertaken, and the single most common answer for p/g students was to get a better job or promotion.

By: conrad

conrad — Thu, 14 Sep 2006 23:28:42 +0000

An additional factor based on your observation about PG vs. UG degrees is that rather there being just differences in experience and ability, it may also be that employers now prefer people with PG degrees more in some situations, and that may simply be due to a new cultural norm vs. actual ability (a side effect of post-graduate degree proliferation). In this case, the extra money paid for the greater number of people with PG degrees would simply subtract from the people with just UG degrees.

By: Robyn

Robyn — Thu, 14 Sep 2006 22:36:31 +0000

“Perhaps less able”? Maybe, but I would have thought you’d need finer levels of disaggregation before you could assume that. I notice from your link that gender is a significant factor - with more women in undergraduate higher ed we seem to be getting more women with bachelors degrees only than men, and possibly a shift in the professions the bachelors lot are working in, and the earnings profile would reflect that too, wouldn’t it?