Background
Education is one of the channels through which intergenerational transmission of (dis-)advantages works. The higher the level of education acquired the greater the opportunity of finding a good job. However, in the last decades the UK has seen an increasing trend of participation of individuals coming from low socio-economic backgrounds in Higher Education (HE). This trend is common to the majority of European countries.
Furthermore, we know that young people usually are the most affected by the business cycles, and the last recession has just re-affirmed this to be the case. However, we expect that having a degree would potentially limit, if not cancel out, the potential bad effects of entering the labour market in bad times. Whether having a degree is a “safety net” against shrinking labour demand and whether this is equally true for the whole population of graduates, independently on their SES, is an issue that has not been explored yet in the UK.
Project Aims
The questions that we address in our study are: is education enough to guarantee that individuals from different socio-economic backgrounds will have the same opportunities in the labour market? And how does the macroeconomic environment affect graduates’ chances when taking into consideration their socio-economic background?
Data and Methods
To reply to these questions we use the Destination of Leavers from Higher Education. This survey focuses on the population of graduates and we consider the cohorts of British undergraduate students who graduated from 2003 to 2012.
We depict the effect of the macroeconomic environment by using several definitions of unemployment rate. We exploit different geographical dimensions and locations of the relevant graduate market as well as the heterogeneity in the demand and supply of labour in different sectors.
Findings
We find that high-SES graduates are more advantaged than medium-SES graduates who are more advantaged than low-SES graduates in all dimensions of their activity status and occupation after graduation. A large part of this SES gap is explained by observable characteristics of graduates which are related to a better and greater investment in education since pre-university level of higher socio-economic background students.
However, even after controlling for differences in human capital, demographic characteristics and observable and unobservable HE institutional characteristics, we find that medium-SES and, in a greater extent, low-SES graduates suffer more from graduating in a period of shrinking labour demand compared to their more fortunate counterparts. We hence conclude that the Great Recession had an important impact in increasing inequality even at the highest level of education. We finally suggest and provide some evidence on possible mechanisms which may underlie our results, notably social network quality and geographical mobility scope in the job search.
Research Team
Professor Emilia Del Bono, Professor of Economics, ISER, University of Essex
Ms Greta Morando, PhD student, ISER, University of Essex
Duration
December 2014-March 2015
Funder
Economic and Social Research Council (ESRC)
Data Sources
Destination of Leavers from Higher Education Survey (DLHE)