Posted on Thursday 18th August 2016, by James Howell
A new study from the Institute of Fiscal Studies shows a degree still increases your earning potential.
According to a new study by the Institute of Fiscal Studies graduates still command higher wages, despite the number of graduates increasing. The number of young people (25-29 years old) with a degree has increased from 13% in 1993 to 41% in 2015, however the IFS insists the increased volume of graduates has not had a negative effect on wages.
After the IFS analysed the difference in salaries over the past 50 years, the report says graduates still earn higher salaries than their school leaver counterparts.
The IFS claims the reason for graduate wages not falling is companies are adopting less hierarchical and decentralised ways of working. The change means, the IFS argues, more graduate jobs are created in the UK.
Wenchao Jin, a PhD Scholar at the IFS, says the effect is impressive, however warns the graduate premium may not last for ever.
"The fact that the dramatic increase in the number of graduates in the early 90s did not have any discernible negative impact on graduates' wages relative to school-leavers is remarkable," she says.
"Our research suggests the increasing supply of graduates induced firms to decentralise more decision-making and create more graduate jobs. As most firms have now made such a change, we believe future increases in graduate numbers could reduce the graduate wage premium in the future."