April 14, 2011

ONS on the graduate labour market

Writing about web page http://www.youtube.com/user/onsstats

It's great that the ONS is getting videos explaining their statistics out into the e-world.

Two videos in particular are quite interesting.

The first is about the impact of the recession on recent graduates in the UK: http://www.youtube.com/user/onsstats#p/u/5/TS9hwfkxGe0(added 26 Jan 2011)

Recent graduates are more likely to be unemployed compared to the UK as a whole and to those who graduated 2-4 and 4-6 years ago. This reflects that those who graduated longer ago are more likely to be in jobs, whereas recent graduates are entering a weakened labour market.

When recent graduates are compared to young people of the same age (21-24) without a degree, unemployment rate during the recession was higher for those without a degree, but increased at a slightly slower rate than for recent graduates. Again, this may reflect that graduates are just entering the labour market, while non-graduates are more likely to have already been employed in a job.

Young people no longer in education aged 18-20 and 16-17 have much higher unemployment rates than 21-24 year olds, and the increase in their unemployment rates is much steeper. Almost 1 in 2 of young people aged 16-17 no longer in education and looking and available for work cannot get any employment.

The figures suggest that when the labour market recovers, new graduate unemployment should recede. But graduates who have become 'long-term unemployed', out of work for 12 months or more, may find it more difficult to get jobs because of knock-on effects (e.g. loss of confidence, competing against newer graduates and people in short-to-medium term unemployment, wearing away of skills etc.)

The second video is about graduate earnings in the UK over the last 10 years http://www.youtube.com/user/onsstats#p/u/12/DhQkk24pi5Y(added 6th April 2011)

This video is mainly about earnings differences by gender, with or without a degree, and is less clear and helpful than the information about graduate unemployment. The presentation does not answer how the graduate earning premuim has changed over the decade (instead, it averages the earnings over the decade), or what it is like if we compare male and female engineering graduates without children, for instance. Granted, it's a podcast, but it could have been more about the change in graduate earnings over time rather than going into gender pay diffferences at a surface level.

What it does say, is that the average (median) graduate earnings premium over the last 10 years was about £12 000, and graduate men earned more than graduate women (also true for non-graduates). This was explained in part by men and women studying different subjects, which are linked to different industries, and have different average earnings.

  • 34% of female graduates have a degree in health related studies or education, compared to 9% of male graduates (roughly 3.5 times as many).
  • 47% of male graduates have a degree is business, finance, sciences or engineering, compared to 20% of women (roughly 2.5 times as many).
  • Over the last decade, average earnings in public administration, education and health were £27 600, compared to £37 300 in banking and finance.

Additional explanations include women being more likely than men to leave the labour market when starting a family, and the discontinuity in the earnings growth being difficult to eliminate if women do return to the labour market after having children. Also, even within female dominated industries, women are underrepresented at more senior levels associated with the highest salaries in the sector.

Moreover, why is there such a large pay difference between industry sectors such as banking and finance on the one hand, and education and health on the other? Compensation payments and human capital differentials aside, a couple of interesting answers are unmeasured differences between individuals, and the profitability of firms within industries (rent-sharing). [Here is an interesting working paper about industry wage differentials in Belgium, by Plasman, Rycx and Tojerow (2006): http://ideas.repec.org/p/dul/wpaper/06-14rs.html].


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