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Is it true that having a university degree can get you a better job?

11 Oct 2017 9:35|Marcin Lipka

“A university diploma abroad translates into higher wages, limits the risk of unemployment and in some countries, can even reduce the likelihood of depression. What is it like in Poland?” asks Marcin Lipka, the Senior analyst at Conotoxia.

Marcin Lipka, główny analityk Cinkciarz.pl

Students who began their studies in Poland may wonder if it really is worthwhile to complete their studies.

The data published a few weeks ago by the Organisation for Economic Cooperation and Development (Education at a Glance 2017 report) indicates that higher education is not only beneficial to people with a diploma.

Higher education prevents unemployment

The advantages of graduating can be easily deduced. This list of benefits start with access to work. At the end of 2016, the employment rate of people aged 25-34 with at least a bachelor's degree was at an average of 83% according to the OECD report. On the other hand, Poland's unemployment rate was 4.3%, while the OECD average was 6.6%.

For people without a higher education, but with a general secondary, basic vocational or post-secondary education, the employment rate was 77% in Poland and on average it was 76% (OECD data), while the unemployment rate in Poland was 8% and the OECD average was 9.1%.

In Poland, the unemployment rate among people aged 25-39 (Eurostat data) is less susceptible to economic fluctuations for those with a higher education. Over the past 20 years, this rate has been between 2.6% to 9% for people who have a university diploma and from 6.2% to 21.1% for those without.

Differences in employment rates increase when broadening the age group. Among Poles aged 25-64, the percentage of people employed with higher education is 88%, while only 68% are employed without a university diploma.

An investment that will be quickly returned

In the profits and losses balance sheet related to higher education, the most important thing seems to be the comparison of higher education costs with the perspective of higher earnings. In addition to the extra expenses connected with a higher education, students who work to support themselves usually earn less than colleagues who have already completed their education and have a full-time job. In the next stage, an employee with a higher education and higher earnings will pay higher taxes and higher social security contributions and receive fewer benefits from the state.

According to OECD data, the average gross wages (of people with a higher education in Poland) are about 60% higher than those of employees without a university diploma. This result is close to the OECD average - 56%, and the other 22 EU countries that were compared (53%). However, there are huge differences in wages between countries worldwide - from 17% in Sweden to up to 137% in Chile.

A university degree benefits men more

When separating wage gaps into amounts, it is worth remembering that in order to simplify the comparisons in the OECD study, the purchasing power parity of the dollar (USD PPP) should be noticed (the USD PPP unit is worth 1.75 PLN.) In Poland, a man with higher education throughout his entire professional career will earn 367k USD PPP more (640k PLN) than men not possessing a degree. In turn, after studying at a university level, a woman will earn 230k USD PPP more (402k PLN) than her female counterparts not in possession of a diploma. The figures already include the total profits and costs balance.

The differences between the benefits of a higher education for men and women are not only in Poland. According to the OECD, these differences are due to the overall level of pay of women in relation to men. There is also the matter of a higher rate of women working part-time or having to stay at home looking after children. In Japan, which is an extreme case, the net benefits from having a diploma for a man amount to 239k USD PPP and for women, only 28k USD PPP.

Where is a higher education medicine for depression?

In the OECD report, the individual benefits and losses balance aren’t the only things analysed. In many countries, the state also spends a lot of money on education. Everywhere, however, tax income exceeds public funds invested in education.

Interesting fact: in some countries, the percentage of people with depression is largely dependent on the education level of citizens. In Ireland, as many as 21% of the total number of men and 26% of women with lower and lower secondary education admitted in surveys that they suffer from depression. In this country, only 8% of employees with a higher education were affected by depression. Similar differences exist in the Netherlands and the United Kingdom. In Poland, education and depression are not linked.

Where there are more educated people, there are smaller wage disparities

Another interesting issue - the more people with a diploma in the labour market, the smaller wages gap becomes. In Brazil, Chile and Mexico, where there are fewer citizens with a higher education (20% or less), the earnings of the best educated people are more than twice as high as those who left their education earlier. In turn, in Sweden, Norway, Australia and Canada, where diplomas are granted to over 40% of students, the difference in wages is between 17% and 40%.

The final conclusion: education is beneficial to everyone. After graduation, if people earn higher wages, there are higher taxes for the state. Moreover, when a group of employees with a university diploma grows, the wage gap is usually narrowed across the labour market.


11 Oct 2017 9:35|Marcin Lipka

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