A surge in postgraduate qualifications – including Master’s degrees – in recent years is making it harder for young people who simply have primary degrees to stand out in today’s professional labour market, a new Sutton Trust report, The Postgraduate Premium, shows today.

The research, led by Professor Stephen Machin and Dr Joanne Lindley at the Centre for Economic Performance at the London School of Economics and the University of Surrey, shows that 11 per cent of 26-60 year-olds in the workforce now holds a postgraduate qualification, up from 4 per cent in 1996.

This means that where 600,000 26-60 year-olds held postgraduate degrees in 1996, 2.1 million do so today. The Sutton Trust is concerned that bright graduates from low and middle income backgrounds are increasingly priced out of postgraduate study, so these changes could widen income differentials and reduce opportunities for social mobility.

Those with postgraduate degrees also earn more. The study reveals for the first time the size of the postgraduate premium – the extra money earned by those with postgraduate degrees compared with those who have a Bachelor’s degree.

Somebody with a Master’s can on average expect to earn £5,500 more a year – or over £200,000 more over a 40 year working life – than someone only holding a Bachelor’s degree. In the US, the annual premium is almost twice as high – $16,500 (£10,300), or around $700,000 (£400,000) more over a working lifetime.

There has also been a significant increase in the educational levels of the labour force in Britain and the US over time. Women now have higher levels of education than their male counterparts. There are now equal numbers of male and female postgraduate students in the UK, and women constitute the majority of postgraduates in the US. However, men and women have also been equally affected by changes in educational inequality in Britain, as education-related wage differentials grow.

Sir Peter Lampl, chair of the Sutton Trust and of the Education Endowment Foundation, said today: “Postgraduate study is becoming increasingly the preserve of the better off student, both from home and abroad. That situation will be further exacerbated with £9000 annual undergraduate fees for English students.

“Graduates facing debts in excess of £40,000 through undergraduate student loans are likely to see the prospect of funding a further £20,000 a year in fees and living costs, without having access to student loans, truly daunting. The Sutton Trust has been concerned that £9000 is too high and we believe undergraduate tuition fees should be means tested.”

Professor Stephen Machin said: “These patterns of rising wage differentials for those with the highest levels of education, coupled with rising higher educational inequality by family income, will make it harder to shift the already low levels of social mobility in Britain and America.

“As educational expectations grow and the economic and social position of workers with no or limited qualifications – especially men – has worsened, the need to improve the education and training of a significant section of the workforce becomes ever more important.”

The Sutton Trust is urging the Government, professional associations and universities to develop bursaries and other measures, including a targeted state-backed loan scheme, to enable good graduates from low and middle income backgrounds to continue their studies without incurring significant debt. The Trust also wants the impact of the £9000 undergraduate fees kept under review, and is urging the Office for Fair Access to look at universities’ postgraduate recruitment patterns as part of their annual access agreements.

NOTES TO EDITORS

  • The Sutton Trust is a foundation dedicated to improving social mobility through education. It has published over 120 research studies and funded and evaluated hundreds of programmes for young people of all ages, from early years through to Access to the Professions.
  • The report The Postgraduate Premium: Revisiting Trends in Social Mobility and Educational Inequalities in Britain and America is available on the Sutton Trust website here.
  • Sir Peter Lampl’s blog on postgraduate studies can be read here