Does the higher education expansion in the UK reduce the returns to education? A comparison of returning-from-work versus fresh out-of-school graduates

Bin Huang, Lei Xu and Yu Zhu

Economic Modelling, 2019, vol. 79, issue C, 276-285

Abstract: Using the Quarterly Labour Force Survey, we examine the effect of the higher education expansion following the Education Reform Act 1988 on the returns to education in the United Kingdom. Compared to previous studies, we make the distinction between fresh out-of-school students and returning-from-work students who typically have rather lower prior educational attainment but more work experience. We find that fresh university students have experienced larger declines in lower secondary-school educational attainment while the returning university students have grown significantly in shares as a result of the expansion. After accounting for the compositional changes, the Matching Difference-in-Differences results suggest that the expansion has significantly reduced the returns to education for fresh students, but not for returning students. Our findings imply that government policy to enrol increasingly academically weaker students into universities could be misleading. On the other hand, university education might continue to be an efficient pathway for some low school-achievers to obtain more education and enhance their productivity, provided they have some relevant work experience and favourable non-cognitive skills.

Keywords: education expansion; returning students; Matching Difference-in-Differences; unobservable selection sensitivity (search for similar items in EconPapers)
JEL-codes: I23 I26 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:79:y:2019:i:c:p:276-285

DOI: 10.1016/j.econmod.2019.01.012

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