Non-Technical Summary:
Research consistently shows that higher education participation has positive impacts on individual labour market outcomes and personal wellbeing. However, few studies have examined whether graduates from low socio-economic backgrounds benefit from their university degree to the same extent as graduates from high socio-economic backgrounds do.
Our research fills this gap in knowledge using longitudinal data from two high quality, Australian datasets: the Household, Income and Labour Dynamics in Australia Survey, and the Australian Bureau of Statistics Census of Population and Housing. Using these powerful data sources, we estimate the benefits associated with obtaining a university degree and how these may differ by the social origins of graduates. We consider multiple indicators of health, wellbeing and labour market success, and examine both the short- and long-run effects of degree attainment. Socio-economic background is measured using parental occupational status. Several key findings emerge from our analyses.
First, at labour market entry, graduates from low socio-economic backgrounds earn similar wages as graduates from high socio-economic backgrounds. However, graduates from low socio-economic backgrounds are less likely to work in managerial or professional occupations, and report lower satisfaction with their job security and financial prosperity.
Second, this initial disadvantage experienced by graduates from low graduates from low socio-economic backgrounds fades over time, and is no longer visible at five years after graduation.
Third, the relative returns to obtaining a university degree are greater for individuals from low socio-economic backgrounds than individuals from high socio-economic backgrounds. That is, the improvement in outcomes for the same individuals after relative to before completing a degree is larger for individuals from low socio-economic backgrounds. This pattern of effects applies more strongly to mental health outcomes.
Our findings carry important implications for policy and practice. First, they highlight the role of higher education in mitigating socio-economic inequalities in the contemporary Australian context. Second, they suggest that additional assistance or guidance might be needed to facilitate transitions into the labour market for graduates from low socio-economic backgrounds.
An updated version of this paper has been published as Tomaszewski, W, Perales, F, Xiang, N, and Kubler, M. (2019) Beyond Graduation: Socio-economic Background and Post-university Outcomes of Australian Graduates. Research in Higher Education, 62, 26-44. DOI: 10.1007/s11162-019-09578-4