Project 1: Tuition fee and loan regimes, debt aversion, and early graduate labour market outcomes
Despite substantial increases in tuition fees in England and Wales first in 2006 and then 2012, participation in Higher Education has continued to grow. While these changes have been accompanied with increasing availability of means-tested maintenance grants and bursaries, most students’ university participation will be financed by a higher level of personal debt. Both individuals’ return on this investment in education, and the sustainability of the system financing it, depend on graduates obtaining high-quality matches in the labour market, conducive to high productivity and strong wage growth over time.
Studies of students and graduates in the United States have shown evidence for ‘debt aversion’, a strong dislike of being in debt that leads individuals to take short-term decisions enabling them to clear their debt as quickly as possible. For example, they take the first available job rather than following their otherwise preferred career plan. The UK system differs in that repayments are ‘income-contingent’ – a fixed proportion of income above a certain threshold – rather than mortgage style. This removes the threat of defaulting, but graduates are still burdened with the knowledge that they will be making repayments for a significant proportion of their life.
This project will use the Destination of Leavers from Higher Education Survey to investigate how the job search decisions of graduates from UK universities respond to different aspects of their tuition fee and student loan regimes, including the breakdown between up-front and deferred payments, and the total volume of debt on graduation; and whether those who wait longer to start their first post-graduate job do better in the long-run.
Project 2: Access to and returns from Unpaid Graduate Internships
The prevalence of unpaid internships in the youth and early-career labour market is a matter of increasing policy concern the UK, US, and Europe. Recent expansions in Higher Education mean the supply of graduates aspiring to many jobs exceeds the demand at the starting wage. This means employers are increasingly able to demand prior work experience in a relevant position, which may only be attainable unpaid. This is particularly the case for highly competitive careers, for example law, politics, creative industries, media and publishing.
Notwithstanding the potentially exploitative nature of internships for all participants, in the long term this system may contribute to these agenda-setting professions increasingly becoming the preserve of those originally from higher socio-economic backgrounds, whose families were more likely to have the social and professional networks to find these jobs, and the financial resources to support them through a period of unpaid work.
In this project we will use the Destination of Leavers from Higher Education Survey to document the inequality in access to and returns from unpaid internships by socio-economic status (SES) for a UK graduates.
Outputs
ISER Working Paper: “Access to and returns from unpaid graduate internships” (8 June 2017)
Project 3: Unpaid Work and Access to Science Professions
The objective of this research is to explore to what extent the science graduates who take unpaid internships in the UK are disproportionately drawn from certain groups, and the extent to which unpaid internships offer a ‘foot in the door’ in terms of access to science professions and other measures of job quality.
Using data from the Destination of Leavers of Higher Education (DLHE) survey, this project will test the hypothesis that science graduates with higher socioeconomic backgrounds take unpaid work at a higher rate than graduates from poorer households, conditional on gender and degree performance. We will then compare the subsequent labour market outcomes of interns and those who went straight into paid work after their degree, to test the hypothesis that unpaid work experience provides an advantage in accessing scientific professions in the UK.
Duration
January 2015 – June 2018
Funder
Economic and Social Research Council (ESRC)
Research Team
Dr Angus Holford, Senior Research Officer, ISER, University of Essex
Data Sources
Destination of Leavers from Higher Education Survey (DLHE).