The Returns to Academic and Vocational Qualifications in Britain

Individual copy price: £5 The Centre for the Economics of Education is an independent research centre funded by the Department of Education and Employment. The view expressed in this work are those of the authors and do not necessarily reflect the views of the Department of Education and Employment. All errors and omissions remain the authors. Executive Summary Previous work looking at the returns to qualifications in Britain has generally focussed on the return to the highest qualification obtained by that individual. Almost all of this work has also grouped together 'similar' vocational and academic qualifications. From the small number of studies that have distinguished between academic and vocational qualifications, the evidence is mixed. It is therefore still unclear whether there are significant differences in the returns to academic and vocational qualifications. The only study that we are aware of for Britain, does, however argue that the returns to academic qualifications are higher than vocational qualifications at 'equivalent' levels. The paucity of evidence on this issue is a prime motivation behind this research. In this research we measure the impact of each qualification held by an individual on their earnings, as opposed to simply including the individual's highest qualification in the equation. For example, if an individual has both O levels and A levels, we include both sets of qualifications in the wage equation. We also use the most disaggregated qualification level possible. For instance, we do not group all the City and Guilds qualifications into one category but rather separate them into three. This approach is advantageous for two reasons. Firstly, we can add substantially to the economic literature on the returns to education by measuring the returns to particular qualifications that have not yet been evaluated, especially some vocational qualifications. Secondly, this approach means we can investigate the financial gain associated with different qualification profiles. In other words we can determine whether previous estimates of the average return to a particular qualification, such as a degree, hide differing returns depending on the route taken to acquire that qualification. For example, we can determine whether non-traditional HE students who do not have A levels earn a different return to their degree than those who enter HE via the A level system. The key findings are: • The additional returns associated with academic qualifications, taking no account of the time taken to acquire such qualifications, are typically higher than those …