Initial earnings data can give ‘false impression’ of value of colleges, warn researchers.
The subjects that young people study on vocational courses affect their future earnings more than twice as much as which further education (FE) college they attended, new research reveals.
Researchers from the Centre for Vocational Education Research at LSE, find that students aged 16-20 who went to an FE college in the top 15% of colleges, as ranked by the researchers’ own value-added measure, earned 3% more, on average, seven years later than a student from the same background and with the same school grades, who went to a college in the bottom 15%.
But when looking at young men who studied engineering and manufacturing technology at an FE college (and who did not go on to higher education) the researchers find that this specialisation boosted students’ earnings by at least 7% compared with their earnings before attending FE college – regardless of which college they attended. In contrast, students specialising in retail and commercial enterprise did not see any increase in earnings five years on.
The research report – Where versus What: College Value-Added and Returns to Field of Study in Further Education – also finds that for many fields of study, positive earnings returns take time to materialise. This means that some students have to wait some years until they perceive the monetary benefits of their educational investment.
Authors Esteban Aucejo, Claudia Hupkau and Jenifer Ruiz-Valenzuela created their own value-added measures for FE colleges in England to estimate the impact of vocational education on young learners (aged 16 to 20) by looking at how students with the same socio-economic background, quality of secondary school attended and prior attainment did in terms of earnings and employment on average around seven years after attending college.
They then used these value-added measures to rank colleges and assess the impact of going to a college with a low value-added score compared to one with high value-added score.
A similar exercise was also carried out for adult learners – the impact of FE education on the earnings of adults (aged 25-59) was half that of young learners, perhaps because young learners spend substantially more time in college.
Jenifer Ruiz-Valenzuela, research economist at CEP, said: “Our research suggests that what rather than where you study is more relevant for your employment and income outcomes. But when looking at continuing in education, the college you attend makes a bigger difference, with students at colleges in the top 15% by value added, having a 10% higher chance of going onto higher education than those in the bottom 15%.”
Claudia Hupkau, assistant professor in the Department of Economics, CUNEF, Madrid and CEP associate, said: “We find that looking at earnings immediately after leaving college may give a false impression of the value of this education. Students in an FE college will typically specialise in one field of study – which takes up 50% to 80% of their time, and take additional courses. Immediately after leaving college, students taking many of these specialisations would earn less than before enrolling. But five years on, most specialisation see significant earnings increases, especially for young women. The fact that the timing of measurement of labour market outcomes matters, has important policy implications for the evaluation of colleges in terms of the subsequent jobs and earnings of their students.”
Esteban Aucejo, associate professor in economics at Arizona State University and CEP associate said: “We find some evidence that certain characteristics of the learning provided at an FE college seem to be important: A higher share of learning delivered in the classroom is associated with higher value-added, while distance learning is associated with lower value-added – something that should be borne in mind during the current Covid-19 crisis.”