Effects of VET and uni completion on wages
A new report by the National Centre for Vocational Education Research (NCVER) has found that the difference in wages of those who complete their TAFE studies and those who do not complete tend to disappear over time.
However, the report found that the wages paid to university graduates remain above the pay levels of those who did not complete their degrees.
The project examines the effects of vocational education and training (VET) and higher education qualifications on the wages of young people in the three years following their last education spell.
The main contribution of the research is that it clearly distinguishes the participation and completion effects (albeit with a particular focus on the latter), while most previous studies have looked exclusively at course completion.
The research focused on the 1995 and 1998 cohorts of the Longitudinal Surveys of Australian Youth (LSAY) data, making it possible to distinguish completed and uncompleted courses.
Descriptive statistics reveal that, for some VET and university courses, completers experience higher wages than non-completers in the few years following the course. However, the differences in wages between completers and non-completers are not consistently significant or tend to disappear over time for VET students, whereas they remain positive and significant for university students.
The relative wage premiums associated with course completion are referred to as completion premiums. Completion premiums are calculated as the difference in hourly wages between completers and non-completers one, two and three years after their last education spell.
The completion premium for one year after the course is close to 19% for university graduates, and remains statistically significant two and three years after obtaining the degree, with no sign of a reduction in the size of the premium over this period.
For VET completions, the report concluded that “completion of a VET course may have a positive effect on subsequent wages but these effects tend to be imprecisely estimated.
“By contrast, we find strong and convincing evidence that enrolling in a VET course increases subsequent wages. In other words, completion may not matter in terms of wages, with VET participants still enjoying higher wages than non-participants.”
The full report is available here