What you study matters far more than where you study in shaping your future prosperity, Australian research suggests.
An analysis by Canberra civil servants has concluded that choice of discipline influences graduate earnings about five times as much as choice of university, in the years immediately after students complete bachelor’s degrees. And the situation is little changed a decade later.
The researchers plotted enrolment and completion records against income data from the tax office to identify the factors that shape earning capacity. They could not explain most of the variation in people’s pay cheques, suggesting that features not captured by the statistics – such as personal motivation, resilience and employing industry – were the main contributors.
But of the measurable characteristics, area of study explained about 10 per cent of the variation in salaries between one and two years after graduation. Institution of study explained just 2 per cent of the difference.
When the researchers analysed data on graduates who had finished their studies 10 years previously, the results were almost identical, with field of study accounting for more than 9 per cent of pay variation and university less than 2 per cent.
Andrew Norton, a higher education policy expert at the Australian National University, said the findings supported his long-held view that “which uni you go to in Australia is not a massive driver of your future earnings”.
Professor Norton said that this reflected positively on Australian higher education. “It’s not such a high-stakes system where you’ve got to get into the top uni straight out of school. It’s a more even contest,” he said.
Undertaking further full-time study also contributed significantly to the earnings of recent graduates, explaining over 6 per cent of the pay variation. Gender barely mattered, accounting for just 0.1 per cent of the difference.
The reverse applied 10 years out from graduation, with gender explaining more than 5 per cent of the difference and further full-time study just 0.2 per cent.
Regionally based institutions delivered the highest earnings for recent students, occupying the top four places in a graduate pay league table and seven of the top 10.
Median graduate incomes from ladder leaders James Cook, Central Queensland, Southern Queensland and Charles Darwin universities were more than double those for the bottom-placed University of Melbourne.
But the report explains that most of the top performers are favoured by students who already have a “head start” in the labour market. Universities with lower initial incomes have more graduates moving into further study, limiting their early earning power.
A decade on from graduation the situation had reversed, with universities in major capitals claiming the top five spots and eight of the top 10. But the variation in median salaries from the top- and bottom-paying institution had narrowed by more than 70 per cent.
Universities from the prestigious Group of Eight network dominated the 10-year league table, claiming four of the top five spots and five of the top 10. But in a separate report into the incomes of master’s degree graduates, location trumped institutional grouping, with most of the top-performing universities based in Sydney or Canberra.
Professor Norton said this suggested that postgraduate earnings were more influenced by the strength of the local economy than the nature of the university. “There is a local labour market effect that really needs to be taken into account.”
