What Effect Does Education Level Have on Wealth?

What Effect Does Education Level Have on Wealth?

The financial benefits of higher education are frequently debated, especially with the increasing demand for skilled workers driving up the wages of tradesmen. So does having a higher level of education result in an increased average salary?

The picture in the EU

According to Eurostat data, the average salary for those with a high level of education (at least one year of tertiary education) in the EU was approximately 50% higher than those with a medium level of education (secondary/high-school), and a humongous 70% higher than those with only a low level of education (anything below secondary/high-school).

The basic correlation was consistent across all member states, but the highest disparity between wages by education level was in Portugal – the average hourly earnings there were three times higher than for those with a low level of education.

The trend was constant throughout the European Union and the EEA, regardless of GDP. The richest European country by capita, for example, is Luxembourg, where residents with a high level of education make almost double those with the lowest level of education. Compare this to the country with the lowest GDP per capita, Bulgaria, where the difference in wages between the least and most educated residents is just above double.

Similarly, in the Czech Republic, Hungary, and Poland, the average wage is more than twice as high for those educated to a high level.

There’s a clear correlation between education level and salary. Generally, the more educated you are, the greater your salary becomes.

The picture in the UK

Focusing on the UK specifically, reports from the Office of National Statistics showed that the more advanced your education, the higher your salary throughout your lifetime.

While those who did an apprenticeship earn a higher wage at the age of 21 than those who graduated university, this quickly reverses after graduates spend a few years in the workforce.

Those who completed an apprenticeship earn less than graduates at all ages over 24 but earn more on average than those educated to A level or A to C grade GCSE standard.

For those educated to an A to C grade GCSE standard, gross annual earnings level out at around the age of 30 at an average of £19,000.

For graduates, their annual income rises at a rapid rate as they get older, before plateauing around the age of 39 at an average of £35,000.

The picture in the US

The same pattern emerges in the US. Data from the 2018 Current Population Survey showed that the average weekly wages were:

  • Less than a high school diploma – $553
  • High school graduates – $730
  • Some college – $802
  • Associate’s degrees – $862
  • Bachelor’s degrees – $1,198
  • Master’s degrees – $1,434
  • Professional degrees – $1,884
  • Doctoral degrees – $1,825

The picture in other developing nations

In fact, education level and employment prospects seem to correlate around the world. A study carried out by the International Labour Organization found that tertiary education in developing countries led to a higher chance of securing stable work, and earning more money.

The study, which covered Northern and Sub-Saharan Africa, Asia, Eastern Europe, Latin America, and the Middle East, showed that an average of 83% of young people with university-level education had secure jobs in the 27 countries surveyed, as opposed to 40% of those with only secondary education.

Additionally, graduates also secured higher wages. In Nigeria, for example, those with secondary education earned an average of 3,800 Nigerian naira, those with a polytechnic qualification earned 5,300 naira, and those with a university qualification earned 9,133 naira.

However, none of these statistics take into account the social and financial background of those surveyed. It’s important to bear in mind that the vast majority of students accessing higher education, especially in less economically developed countries, have parents who can afford to send them to university and support them while they study. And it’s often the case that familial background has just as much of an effect on potential earnings as education level.

Nevertheless, the results are consistent across the board. Higher levels of education offer a better salary and quality of life, wherever you’re living.

How is your university communicating these lifelong benefits to prospective students? And how are you targeting international students in key markets? If you’d like to discover how to transform your university’s international student recruitment strategy, please contact our QS Enrolment Solutions team.

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