Investigating the value of postgraduate education

Yesterday we launched some new research at the Institute of Student Employers. The paper was our annual survey of student development and covered a wide range of topics. But one of the breakout stats was the fact that only 19% of employers agreed that students with a postgraduate degree came with more skills than those who did not. Even more damning for those running postgraduate programmes only 12% agreed that these postgraduate level hires progressed more quickly in terms of salary than those who had just first degrees. This builds on a similar stat from our recruitment survey in the summer where only 9% said that they offered specific packages for postgraduates.

Cue Twitter storm that raged throughout yesterday. Surely this can’t be right? Surely postgraduates earn more? Have more skills? Are more advantaged and so on?

So I thought that I’d write a post to try and summarise this debate and consider what we really know.

Understanding the ISE study

The first thing is to be clear about what the ISE study does and doesn’t do. The ISE is a membership organisation which is typically made up of larger recruiters with a strong background in general graduate recruitment. Although its membership has broadened a bit, it is still dominated by this formal/official graduate labour market. As such it is likely that it is not more widely representative of the wider graduate/postgraduate labour market. For example ISE employers pay on average about £5K more for graduate entrants than the median graduate salary. It could be that this differential is disguising a benefit that might accrue to postgraduates when they enter smaller firms with less formal structures (personally I doubt this, but it would be worth looking into).

What the overwhelming majority of our members are saying is that (1) they don’t look for postgraduates or actively try and recruit them; (2) when they recruit them they don’t think that they are any better than other new entrants that they have; and that (3) they don’t believe that these candidates progress faster than their undergraduate qualified counterparts. However, we have not asked for detailed data on postgraduate salaries, offer rates or progression and it is of course possible that postgradutes do better than our members think, but that they don’t notice the postgraduate degree as being the key thing.

The value of postgraduate qualifications to career

A couple of years ago I co-wrote a paper with Jane Artess where we looked at issues of careers and postgraduates. In this we noted that this relationship is strong because (1) most students undertake postgraduate degrees because they want to develop their careers; (2) their engagement on course is strongly influenced by their career motivations; and (3) they are keen to move quickly from the end of their course into work.

We made the distinction between (1) vocational courses linked to or required for a specialised occupation (e.g. interpreting – where skilled linguists train students in interpreting); (2) semi-vocational courses relating to a broad occupational area (e.g. business) and (3) non-vocational courses (e.g. philosophy) and highlighted the fact that many PGT programmes which do not appear to be vocational actually serve as a testing and training arena for those wishing to pursue an academic career. Finally we also made a distinction between continuers (who pursue an academic career straight after an undergraduate degree) and returners (who come back to study at PG level later in life, often as part of a process of career development or career switching).

In other words, this is complex. We should expect the labour market returns of highly focused vocational courses to be different from those that are more general. Equally a successful professional who returns at 40 years of age to advance their career is likely to have more resources that interact with their qualification than someone who pursues the same course at 21. Given this we probably shouldn’t expect the labour market returns to be the same.

Our conclusion, largely based on first destination data, was that the labour market returns of postgraduate degrees were complex and far from guaranteed. However, in this paper we were able to ask more questions than answers and were still left with the question: is a postgraduate degree worth doing?

Labour market returns on postgraduate degrees

Thankfully there is quite a lot of literature which looks at the relative returns of different qualification levels. For a forthcoming paper I’ve charted some OECD data from 35 countries.

As you can see this shows pretty clearly that more education is better and that postgraduate qualifications offer a salary advantage over undergraduate degrees. Back in 2013 Lindley and Machin quantified this bonus as being worth around £5,500 a year of additional salary and argued that postgraduate degrees are actually getting relatively more valuable over time.

This kind of findings about a ‘postgraduate premium’ is important because it opens up a new barrier to social mobility that can only be overcome with the educational, cultural and financial capital required for postgraduate study. As Wakeling and Laurison ask ‘are postgraduate qualifications the new frontiers of social mobility?‘ (SPOILER – the answer is yes).

Both of the studies that I’ve cited highlight the way in which any postgraduate premium interacts with other demographics (notably class, gender and ethnicity) in fairly predictable ways. Advantaged people are more likely to study at PG level and (particularly more recently) to extract labour market value from it.

Making sense of this

So how does this make sense? Why are employers saying that they don’t particularly look for or value postgraduate degrees and yet they seem to offer some very clear labour market advantages? Here are some thoughts that I’d be interested in others’ ideas on.

  • Postgraduate qualifications probably reward you more in some sectors than others. So it is possible for a large proportion of employers to be disinterested in them, but for them still to offer benefits for those who go into the sectors where they matter?
  • Postgraduate qualifications serve as an entry route or licence to practice in a number of professions (teaching, law, social work etc). I’d be interested in what would happen to the premium if you removed these from the analysis. e.g. what is the difference in premium between vocational, semi-vocational and non-vocational PG degrees.
  • The route by which you access postgraduate degrees probably matters. In particular whether you are a returner or a continuer. Again it would be interesting to look at how premiums vary between these groups. e.g. are you better to stay on or work for a while and come back.
  • There might be something different about the formal graduate labour market as represented by the ISE. Perhaps the focus on intense recruitment and selection processes reduces the focus on qualifications within these kinds of firms?
  • Most of the people answering our surveys are concerned with the early careers of postgraduates. It may be that there unique value emerges later on in their career and so is not fully apparent to those answering the survey.
  • Things might be changing. Perhaps employers have had enough of postgraduates?

Why does this matter?

Figuring out the premium associated with postgraduate study matters for the careers of all people considering this route. It also matters if although there is a general premium this is not available to everyone depending on the subject or routeway that they choose or because of some other factor.

Universities are keen on the idea of a postgraduate premium because it allows them to sell courses. But it is only if we understand better how and to who this premium is available that we can be certain that this is not miss-selling. The findings in our survey should at least give us some pause for discussion and debate on this.


  1. I think this is a very thoughtful and perceptive analysis, Tristram. PG qualifications are associated with an earnings premium *on average* but that will vary across field of study, industrial sector, lifecourse, background characteristics and so on (not unlike first degrees, in fact). LEO data shows benefits for some subjects, but in one or two there is an earnings penalty. If there is causality, we don’t know which way around it is (do people who are likely to earn more for other reasons do PG, or does PG help people earn more?).

    For me, what is interesting about employer responses is that they are based on employer *perceptions*. It’s perfectly possible (I would say likely) that employers *think* they behave in a particular way, but *actually* behave in another.

  2. Today it is best to have a Postgraduate Degree because it opens new career opportunities and also the chance to get a high salary more than what can be experienced with the basic undergraduate degree. In some industrial sectors this degree does not make much of a difference in the career as does experience but in many others it is the route to an exciting career environment with a big bracket income.

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