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 (Lead / Corresponding author), Yu Zhu

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    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.
    Original languageEnglish
    Pages (from-to)276-285
    Number of pages10
    JournalEconomic Modelling
    Volume79
    Early online date24 Jan 2019
    DOIs
    Publication statusPublished - 1 Jun 2019

    Keywords

    • Matching Difference-in-Differences
    • education expansion
    • returning students
    • unobservable selection sensitivity

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