Degree holders earned an average of £12,000 a year more than non-graduates over the past decade. After adjusting to allow for increases in earnings over the period, the data show that graduates aged 22 to 64 had median salaries of £29,900 compared with £17,800 for non-degree holders.
Using the Labour Force Survey (LFS) it is possible to compare earnings over the past decade by adjusting them to 2010 levels using average weekly earnings (AWE). Looking at how earnings differ between different ages:
Earnings are similar for those aged 22 at around £15,000, regardless of whether they have a degree or not.
For those without a degree, earnings increased for each year of age, levelling off at the age of 30 and peaking at the age of 34 at £19,400.
For those with a degree, earnings increased faster for each year of age. They also increased for longer, levelling off at the age of 35 and peaking at £34,500 at the age of 51. After this point average wages decreased as it is more likely that the high earners were able to retire and leave the labour market.
Earnings for women, with or without a degree, levelled off earlier than for men with the same level of qualification. This may reflect that some women choose to start a family and take time out from working:
For women without a degree earnings levelled off at the age of 31, with earnings for women with a degree levelling off around the age of 33.
For men without a degree earnings levelled off at the age of 34, with earnings for men with a degree levelling off around the age of 39.
Considering individuals’ working patterns, for example differences in the number of hours worked, hourly earnings are better to compare men with women.
The type of degree studied can in part explain the differences in the earnings of men and women. For example in 2010:
34 per cent of female graduates had a degree in either health related studies or education, compared with only 9 per cent of male graduates.
47 per cent of male graduates had a degree in business and finance, sciences or engineering compared with only 20 per cent of female graduates.
These qualifications often lead to employment in the related industry. Average earnings for graduates over the last decade were:
£37,300 in the banking and finance industry (predominantly male).
£27,600 in the public administration, education, and health industry (predominantly female).
Earnings for those without a degree were also highest in the banking and finance industry at £20,300, compared with those in the public administration, education, and health industry at £14,700.
These differences may, therefore, go some way to explaining the difference in average pay for men and women. Over the last decade, the LFS shows that a male graduate could expect to earn, on average, 20.4 per cent more than a female graduate.
However, the gap was marginally wider for non-degree holders, at 23.1 per cent.
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A graduate is defined as an individual who has completed the first stage of tertiary education.