The impact of undergraduate degrees on lifetime earnings studied the impact of undergraduate degrees on income and found that median earnings of male graduates grow strongly throughout their thirties, at a of 3.5%, and much higher than that of non-graduates.
By contrast, the median growth of undergraduate females’ earnings in their thirties is only moderate, although it is still higher than that of non-graduates.
For male graduates who were 30 in 2016 earnings were predicted to rise by £15,000 from age 30 to 40. In contrast, in the same time frame non-graduate men will see a rise of just £5,000 in their median earnings.
The report predicted median real earnings of female graduates who were 30 in 2016 to rise by around £5,000 from age 30 to 40, compared with no growth for non-graduate women.
Consequently, the causal effect of having an undergraduate degree on earnings grows after age 30 for both men and women, but much more strongly for men.
According to the report average pre-tax returns for men increase from around 5% on average at age 30 to more than 30% on average at age 40, after which they increase more slowly to reach around 35% from age 50.
For women average pre-tax returns increase from around 25% at age 30 to more than 40% at age 40, but then fall again to between 30% and 35% at ages 50 and 60.
The report concluded that while getting an undergraduate degree is worthwhile financially for most students there is significant variation across subjects.
Subjects such as medicine, law and economics offer a springboard to very lucrative careers. Others, such as computing, pharmacology and education, are safe choices with acceptable returns for almost anyone.
Creative arts degrees were identified as providing the lowest financial returns for both men and women. Just 45% of women and only 5% of men were predicted to see positive net returns from studying the subject.
Alternatively, 100% of women who studied pharmacology and 100% of men who studied economics, were set to be getting positive net returns.
This is the third in a series of reports by researchers at the Institute for Fiscal Studies, commissioned by the Department for Education, that make use of the Longitudinal Education Outcomes (LEO) dataset to improve information on the value of higher education degrees.
The report’s estimates are based on the earnings of individuals who were born in the mid-1980s and went to university in the mid-2000s.
Further reading
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Gender pay gap won’t close until 2069 unless more girls study STEM
