- Does degree class matter? The effects of degree classification on graduate earnings
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Abstract:
- This paper analyses wage differentials by degree classification among graduates in the United Kingdom using the 1970 British Cohort Study. It deploys a ‘Mincerian’-inspired earning function to estimate the wage premiums associated with degree classification awards at the conditional mean of wage using ordinary least squares (OLS), and at conditional quantiles of the wage distribution using quantile regression (QR). I identify a premium associated with a good degree class (i.e., first and second-upper), as the OLS regression predicts that a good degree class relative to a lower degree class, on average, increases hourly wage by approximately 7.6%. The QR strategy also finds systematic differences in the degree class premium along the conditional wage distribution, and reports significant evidence that wage differential between good and lower degree class holders is stronger at higher quantiles of wage earnings, at approximately 5.4% for median wages to 10.9% for top decile wages. My results corroborate to literature that degree classification has both economical and statistical significances on graduate earnings.
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