VET & TAFE
campusreview.com.au
Exception to the rule
Where VET trumps university
in terms of earning potential.
By Nicole Madigan
W
hile there exists a generally
accurate perception that tertiary
qualifications will earn you
a higher income in the long run when
compared with higher-level vocational
training, the reverse is true when it comes
to careers in STEM, according to new
research.
The National Institute of Economic and
Social Research (NIESR) published the
findings, which showed that earnings of
people achieving higher-level vocational
qualifications in STEM subjects can exceed
those of people who pursued the same
subjects at a university level.
The report, published by NIESR
researchers affiliated with the National
Centre for Vocational Education Research,
was based on the first comprehensive
study comparing the earning outcomes of
young people pursuing higher vocational
qualifications with those of degree holders.
Analysing data from hundreds of
thousands of English secondary school
leavers, the research found that by age 30,
earnings of degree holders in many subject
areas are consistently higher than those of
people with higher vocational qualifications.
However, people achieving Level 4–5
qualifications in STEM subjects earn more
than people with degrees from many
universities.
“Our results show that initially higher
earnings observed for people achieving
higher vocational education disappear
when people are in their mid-20s,” says
Stefan Speckesser, NIESR’s associate
20
research director and co-author of
the report.
“Depending on the type of university
attended, male degree holders earn up to
18 per cent more by age 30, while female
graduates earn around 40 per cent more.
“However, there is considerable
heterogeneity by gender and subject area.
“There are high returns related to higher
vocational/technical education in STEM
subjects, which remain significantly above
those of many degree holders by age 30.”
People with higher-level vocational
qualifications (i.e. Level 4–5) overall show
relatively high earnings early in their
working lives because more of them work
before or during their studies.
This is very different to degree holders,
who are more likely to pursue full-time
education up to the end of their studies.
Over time, average earnings converge
and are eventually higher for degree
holders.
“This study is in line with previous
findings, but sheds new light on the topic
given the richness of the data and the novel
focus on tertiary education in England
– higher technical education vis-à-vis
academic degrees,” Speckesser says.
“This paper provides for the first time
estimates for higher-level technical
qualifications relative to university degrees.”
Speckesser adds that there is a perception
that university garners higher incomes over
time, which is generally accurate and has
been proven by previous studies.
“The [high] returns to university degrees
have been studied before, mainly in
contrast with earnings of people without
tertiary education.
“Also, the expansion of higher education
has responded to some extent to a higher
demand for graduates [which translates into
higher earnings].
“Furthermore, higher education is
associated with other benefits [not only
monetary returns, e.g. better health
and crime reduction], which have been
successfully exploited by universities and
fostered by policymakers.
“In that sense, the perception that
university education can lead to positive
outcomes is not misleading.”
However, in this context, within
tertiary education, higher-level technical
qualifications emerge as an alternative.
“When looking into results by subject, we
find that earnings of males with Level 4–5
science, technology, engineering and
mathematics qualifications are comparable
or higher than earnings of STEM degree
holders by age 30.”
Speckesser says rapid technological
change is one of the key contributing
factors to why STEM-related careers have
emerged as an exception to the rule.
“High demand from employers in the
context of rapid technical change.
“Higher-level technical qualifications
focus on skills that target specific jobs.
“University degrees are associated to
general and more abstract knowledge,
i.e. transferable skills.
“[Another reason is] not enough skilled
workers in the labour market. This relates to
not enough women taking these subjects
and occupations.”
But that doesn’t mean those seeking
a career in STEM should shun university
education, Speckesser says.
“Higher technical education and academic
general education are complements to some
extent. They are not perfect substitutes.”
Speckesser adds that data on earnings
outcomes is extremely valuable as young
people and their families approach the
choice of higher education.
“Higher vocational education offers an
important – if massively under-explored
– alternative choice of tertiary education,
often run by local colleges and resulting in
lower debt for students compared to those
incurred by degree holders – or, if within an
apprenticeship, no debt at all because of
employer funding.
“Our study shows that for young people
interested in specific professional roles,
higher vocational education could indeed
offer a useful, cheaper and ultimately more
lucrative alternative to university.
“Further research should identify market
failures and influence policymaking. This is
an ongoing investigation.” ■