What young graduates earn when they leave study

This report examines outcomes for young people who complete a qualification in the New Zealand tertiary education system, looking at differences in incomes for different types of qualifications. Overview People take tertiary education for many reasons. They think about what they enjoy, what they are good at, what they are capable of and what will get them started on a career. Good careers are associated with better health, better well-being and more satisfying lives. So many young people are making their tertiary education choices to gain the skills they need for satisfying and rewarding work. They use a range of information sources to help them make these choices. The information in this report is designed to add to the data available to young people facing those decisions. This information is not just important to students and to their families. The Government makes a very large investment in tertiary education each year – funding tertiary education providers, providing subsidised student loans and granting student allowances. One major purpose of the Government’s investment is to help improve the New Zealand economy and society by raising the level of skill in the population – which helps make our society more productive, contributes to the creation of wealth and leads to better social outcomes. Studying the earnings of graduates is one way of looking at the contribution that the tertiary education system is making to New Zealand’s society and economy. So the information in this report contributes to an understanding of the value New Zealand receives for the investment we make in tertiary education. Key findings Earnings increase with the level of qualification completed. The biggest jump in earnings is between those with qualifications below degree level and those with degrees. Earnings remain consistently higher for those with higher qualifications. Those with higher qualifications consistently earn more for the first seven years post study, with no sign of these benefits decreasing. Employment rates increase with level of qualification gained. For example, in the first year after study, 54 percent of young bachelors graduates who stayed in New Zealand were in employment and 40 percent were in further study. Of young people who had completed a level 1-3 certificate and stayed in New Zealand, 35 percent were in employment and 48 percent were taking more study. Very few young people who complete a qualification at diploma level or above are on a benefit in the first seven years after study. For those who stay in New Zealand, the benefit rate is 6 percent for diploma graduates and 2 percent at bachelors level in each of the first seven years after study. But it is around 14 percent for those who graduated with certificates at levels 1-3. Earnings vary considerably by field of study. Young graduates with bachelors degrees in medicine earn the most of all bachelors graduates. The median income for medical graduates is over $110,300 five years after leaving study, compared to $51,600 for all young bachelors graduates. Bachelors degree graduates in creative arts have the lowest earnings among young bachelors graduates after five years and they have relatively high rates of benefit receipt. Some qualification types and some fields are associated with high rates of further study. Around half of all young people who complete a certificate or level 5-7 diploma move into further study the next year. Around 60 percent of young bachelors graduates in natural and physical sciences who stay in New Zealand were in further study one year after completion of a bachelors degree, and 32 percent after five years. Those who complete graduate certificates and diplomas have very high employment rates. Employment rates are around 80 percent or just below in the first three years after study for those who have completed a graduate certificate or diploma and who remain in New Zealand. Many of these graduates have completed this qualification as a way of improving their employment prospects or are studying while in employment. The effect of the recession on the earnings of young graduates is still apparent. Although the country as a whole has pulled out of recession, the effects on young people have lingered with graduate earnings continuing to drop in real terms compared to those reported in our first study, Moving on up, for most years after study and at almost all qualification levels. However, there are indications that the rate of decrease in earnings may have been slowing down for recent graduates by the end of the 2012 tax year