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Why a university degree is worth more in some countries than others

Higher earning

Why a university degree is worth more in some countries than others

Why a university degree is worth more in some countries than others

James Tozer | December/January 2017

A university education might expand your mind. It will also fatten your wallet. Data from the OECD, a club of rich countries, show that graduates can expect far greater lifetime earnings than those without a degree.

The size of this premium varies. It is greatest in Ireland, which has a high GDP per head and rising inequality. Since 2000 the unemployment rate for under-35s has swelled to 8% for those with degrees – but to more than 20% for those without, and nearly 40% for secondary school drop-outs. The country’s wealth now goes disproportionately to workers with letters after their names.

Low income taxes help. Irish graduates keep most of their earnings, as do Americans. Students in the United States also reap hefty returns due to a shortage of skilled labour (chart, below). Demand is substantial: the use of maths in the workplace is 10% greater than the OECD average. The supply is limited, since Americans are not particularly numerate. College graduates stand to gain.

Students in former Eastern Bloc countries also benefit from scarcity in the labour market, thanks to a historical lack of tertiary education. On average, one in four 55-year-olds in an OECD nation has a degree. In Poland, Slovakia, Slovenia and the Czech Republic it is closer to one in seven. But the university gates have opened wide: the proportion of Poles aged 25-34 with a degree tripled between 2000 and 2012.

Freshmen in Benelux and Nordic countries have less to celebrate. Getting a degree in these countries takes a long time, and therefore means missing out on more wages. The general population is well-educated and taxes are high. The boost in earnings for a Norwegian graduate is half as big as for a Czech, and he will pay 50% more into the government’s coffers. 

2 Readers' comments

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df6756 - December 5th 2016

Using research published in 2014, from data gathered in 2010 to make a statement about the way things are in 2016 - not the most responsible piece of journalism If you do some research on the figures quoted in this article, you might see how vastly out of date they are.

GeorgeBenaroya - December 4th 2016

Great table, particularly because it uses PPP and looks on an after tax basis ("as an investment"). There is, however, a major flaw on the conclusions. In my opinion, the main reason why the premium in Scandinavian countries is smaller is a low Gini index. In other words, compared to other countries, there is smaller difference on the compensation of a receptionist at a hospital (who maybe did not go to college) and a nurse or medical doctor who went to school for 4 or 10 years.