This research provides a review of the literature analysing the economic returns to education.
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- Economic research broadly supports the view that there is a positive relationship between improvements in educational attainment and economic growth. International studies tend to find that the earlier an intervention takes place in a child’s life, the greater the likelihood of it having a positive impact on subsequent educational attainment.
- Private and social rates of return to education are significantly positive in the UK. Social returns are lower, since they take into account the contribution of the state towards the costs of education.
- Some degree subjects appear to have little impact on earnings on average when compared to the earnings of people qualified to A-level standard, while other degree subjects earn a substantial earnings premium.
- The gender wage gap diminishes the higher the level of qualification, but does not disappear completely. The tendency for women to be under-represented in subjects that provide the highest return and over-represented in those that provide a relatively low return is a factor in explaining the gender pay gap.
- Rates of return to higher education in Wales are broadly similar to those found elsewhere in Britain, both in terms of the size of the return and the tendency of the return to vary by degree subject. For men, however, the return to a degree in Wales is somewhat below the British average, which may reflect the under-representation of the highly paid financial services sector in the Welsh economy. In contrast, the study finds that the average earnings premium for female graduates in Wales relative to non-graduate Welsh women is larger than the premium earned by female graduates elsewhere in Britain.