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How Important Is A Better Degree To Earning Potential?

Graduates who knuckle down and get a good degree are guaranteed to earn more money than their peers, new research has revealed.

Data published by the London School of Economics reveals graduates who finish university with a first or a 2:1 earn a better salary than those with a 2:2 or a third.

According to the research, graduates who were born in 1970 and graduated in 1991 with a first or 2:1 earned 7-9% more in terms of salary, five years after graduating.

The results also revealed the gap between earnings is only getting bigger as more and more individuals opt for a university education.

Past research has listed the wage difference between university graduates and those without a degree. However, this research shows the link between earnings and the level of the degree in question.

“As more young people obtain degrees, the premium for graduating with a good class of degree increases,” the research states.

Study authors Robin Naylor and Jeremy Smith of the University of Warwick and Shqiponja Telhaj of the University of Sussex highlighted significant differences between degree outcomes.

“We obtain an estimate of a wage premium of 7% - 8% for a good degree [a first or upper second] relative to a lower degree [a lower second or third] at the ages of 30 and 38,” Mr Telhaj added.

“We view the estimated premium to be large when we consider that our estimate of the premium for a lower degree relative to A-levels is 11% at age 30.”

Another interesting fact to come from this research is those who obtain third-class degrees may end up closing the gap created by grade inflation, pushing universities to issue even more high class degrees.

If you’re considering your options after university, speak with Discovery Graduates today and see what options may be available to you

How important is a better degree to earning potential?

Graduates who knuckle down and get a good degree are guaranteed to earn more money than their peers, new research has revealed.

Data published by the London School of Economics reveals graduates who finish university with a first or a 2:1 earn a better salary than those with a 2:2 or a third.

According to the research, graduates who were born in 1970 and graduated in 1991 with a first or 2:1 earned 7-9% more in terms of salary, five years after graduating.

The results also revealed the gap between earnings is only getting bigger as more and more individuals opt for a university education.

Past research has listed the wage difference between university graduates and those without a degree. However, this research shows the link between earnings and the level of the degree in question.

“As more young people obtain degrees, the premium for graduating with a good class of degree increases,” the research states.

Study authors Robin Naylor and Jeremy Smith of the University of Warwick and Shqiponja Telhaj of the University of Sussex highlighted significant differences between degree outcomes.

“We obtain an estimate of a wage premium of 7% - 8% for a good degree [a first or upper second] relative to a lower degree [a lower second or third] at the ages of 30 and 38,” Mr Telhaj added.

“We view the estimated premium to be large when we consider that our estimate of the premium for a lower degree relative to A-levels is 11% at age 30.”

Another interesting fact to come from this research is those who obtain third-class degrees may end up closing the gap created by grade inflation, pushing universities to issue even more high class degrees.

If you’re considering your options after university, speak with Discovery Graduates today and see what options may be available to you

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