Is UK’s shift to humanities dragging down the graduate premium?

A major theme to emerge from this year’s Education at a Glance – the annual compendium of education statistics from the Organisation for Economic Cooperation and Development – has been the value of studying different subjects at university.

It is a well-worn debate, but it remains highly topical, especially in the UK, where data on graduate earnings have reignited rows over the purpose of higher education.

Against this context, it is no surprise that questions raised by Andreas Schleicher, the OECD’s director for education and skills, about the quality of some degrees and the return from studying certain subjects ignited debate at the report’s launch.

Mr Schleicher told the event, hosted by the Higher Education Policy Institute, that figures from the UK suggested that “more university graduates” were choosing subjects that “are not as much rewarded by the labour market”.

Although it was difficult to get “under” the reasons for this – and it could simply be a reflection of students’ “interests and motivations” – he also questioned whether institutions had enough incentive to “tell people the truth” about the economic value of pursuing some subjects, pointing out that universities could “make a lot of money” providing classroom-based subjects rather than more expensive disciplines.

It was a suggestion challenged by one vice-chancellor at the event, Middlesex University’s Tim Blackman, who said students were well aware that some degrees might not lead to highly paid jobs but were choosing, say, arts subjects “because they are passionate about them” and wished to work in the creative industries.

But putting aside arguments about whether higher education should be more open about graduate earnings, is it even fair to point the finger at arts and humanities degrees in this way?

The statistics from Education at a Glance that sparked Mr Schleicher’s observations do, on the surface, seem to hint that a shift towards a larger share of students pursuing arts and humanities courses in the UK could have affected the overall graduate wage premium.

The share of recent UK graduates taking such subjects is more than 25 per cent, according to the OECD data, whereas less than 15 per cent of all adults with a degree took these subjects. Engineering subjects have gone in the opposite direction, meanwhile, with a smaller share of recent graduates taking courses in these disciplines compared with the wider graduate population.

At the same time, the earnings advantage of gaining a bachelor’s degree in the UK has shrunk, albeit by only a small amount, from 54 per cent in 2013 to 42 per cent in 2017, compared with those not entering higher education.

This on its own does not prove that a shift towards arts and humanities enrolments is the cause. Indeed, there has also been a big increase in the share of young people studying natural sciences and mathematics, too.

But the uncomfortable statistics for the UK sector come from the OECD’s figures on earnings for arts and humanities graduates. They suggest that such graduates actually have an earnings disadvantage compared with someone not going to university, figures that seem to be among some of the lowest in the OECD.

Putting aside the question of whether such statistics actually matter if higher education is about more than graduate earnings, could there be other complex reasons for this situation?

Simon Marginson, professor of higher education at the University of Oxford, observed that graduate outcomes were so interconnected with the specific operations of labour markets in different countries that caution needed to be applied.

For instance, he said, it was important to ask whether degrees in some nations “function as a generic qualification in the labour market, like…engineering in Korea, Finland or Russia” or whether they are “tied to the specific occupation or profession like engineering or medicine in the UK”.

This can affect salary outcomes for different disciplines between countries; for example, an engineering graduate in Russia might be more likely to work in a different profession where salaries are lower.

Regional wage variations in a country can also have an important impact. “There are pronounced regional variations in the UK economy, and some professions or occupations are almost non-existent in certain localities,” Professor Marginson said.

He added that “absolute comparisons” between disciplines were not always helpful because patterns in earnings “change only very slowly, and often regardless of how good the education is” over time.

For example, “nursing or the performing arts are not going to take on the pattern of returns of law or finance overnight”, he said. It was better to look at historical changes in earnings by discipline, Professor Marginson said, while also considering the range of earnings returns in a country rather than averages.

At the report launch, he had also explained that he was “less worried” about the UK graduate premium shrinking “provided the comparative employment rate for graduates stays up”.

This was a point also stressed by Professor Blackman. “The net gain from more and more students…enjoying that premium is significant,” he told the event, while it was also important to examine graduate earnings across the “whole length” of a career “in order to make a judgement” about the value of different degree subjects.

simon.baker@timeshighereducation.com