Research Paper DIUS Research Brief CEE-08-01
Higher education funding reforms in England: the distributional effects and the shifting balance of costs
01 Feb 2008
The extensive debate over the financing of higher education (HE) has lead to a renewed interest in lifetime earnings differences between graduates and non-graduates. This paper makes use of new simulations of lifetime earnings profiles to highlight how graduate lifetime earnings differ from non-graduates’, and to set out what the effects of the new system of HE funding in England introduced in 2006, and a number of variants, would be on the lifetime incomes of different graduates.
This research uses a copula approach to model the dependence in wages between ages, whilst they also allow for a stochastic component to employment, by including entries and exits from the labour market in their simulations. The earnings simulations are based on data from the UK Labour Force Survey (LFS) covering the period spanning 1993 through 2003, whilst the simulated employment paths and re-entry earnings ranks are based on mobility patterns observed in the British Household Panel Survey (BHPS) between 1991 and 2004 inclusive.