IFS report on human capital – an interview

Earlier this month, I interviewed Jack Britton, Senior Research Economist at the IFS, regarding their recent report on graduate earnings: “How English domiciled graduate earnings vary with gender, institution attended, subject and socio-economic background”.

The interview was published on wonkhe and now includes some very useful comments from Mike Picken regarding the reliability of using JACS subject codes to identify different subjects.

I would also add a couple of caveats:

• the report is based on students who first took out loans in 1999 so it is likely that we are looking at the results of courses that were validated nearly 20 years ago.It is very difficult to see how such a ‘lag’ can make for an effective performance metric (in for example the TEF). It’s clear that any institution which aimed to influence this kind of data (through fair means) would be looking for impact decades away – this is only going to create perverse incentives. (Publishing this data is a different issue but similar caveats apply.)
• the IFS themselves have described their non-graduate data as ‘tentative’ [1], since their data is built on the records of ‘student borrowers’: 15 per cent of the student population in the late 90s did not take out maintenance loans and these are therefore mixed up in the non-graduate population. A reasonable assumption would be that those non-borrowers came from wealthier backgrounds: the main finding of the IFS report is that significant ‘wealth effects’ affect graduate earnings. This in part explains the use of ‘creative arts and design’ as the baseline in much of the analysis.

[1] “Our third data set … uses econometric methods to adjust for the fact that some of the individuals in the [sample] will be graduates. Specically we attempt to adjust for former English domiciled students who do not borrow and for former students who were domiciled in Wales, Scotland and Northern Ireland when they started in HE and thus who are not eligible to borrow from the English part of the SLC. This is our best, but tentative, estimate of the earnings of non-graduates in England. We compare our results for non-graduates with those obtained by using the Labour Force Survey.”
p. 5, IFS Working Paper W15/28