Question

Empirically-Oriented Questions Answer the below questions relating to the following table Labour Market Outcomes of Graduates and School Leavers, 2015 % Graduates % School Leavers Aged 25-29 41% 49% Aged 30-59 32% 54% Graduates School-leavers Graduates School-leavers 78.7% Employment Rate Hourly wages 10h percentile Median 90h percentile 88.3% 89.4% 83.2% £7.05 £12.36 £23.08 £6.25 £9.21 £15.93 £8.45 £17.31 £34.63 £6.53 £11.33 £22.13 Source: Blundell, Green and Wenchao (2016) Notes: Calculations are based on Quarterly Labour Survey data for the UK using all four quarters of 2015 Graduates are defined as people with first degrees or higher qualifications. School leavers are defined as people with at least GCSE grade C or equivalent qualifications and without first degrees. School leavers include those with just A-levels or below degree level higher education qualifications 1. a) Calculate the gross rates of return (in percentage terms) for graduate employees for all six groups in the table (i.e. 2 age categories* 3 points in wage distribution. You can also assume that graduates invest in 3 years of post-compulsory education) Which group has the highest rate of return? Which has the lowest?

Answer 1

Ans (1)a) For calculating the gross rate of return we will take the ratio of employment to the graduated or school leavers people because it will the return they are getting from job after graduation or school leaving. This is as follows :

88.3%/41% = 2.15

78.7/49 = 1.6

89.4/ 32 = 2.79

83.2/ 54= 1.5

Highest no is the students which are graduated and among the age of 30-59. As can be seen from the calculation this group having the highest percentage.

(b) Different age group have have wage rate because the wage rate will be higher for the experienced worker as compare to fresher who have just started the job in any sector. The higher the job experience with qualification higher will be the wage of that person.

Ans (2) a) The calculated value may be different from different methods as there are various methods which take many other things in calculation for calculating a particular data for eg in the above question we have calculated percentage just by ratio of employment to qualification ( graduates, school leavers ) we have not taken the factor which may effects value of this ratio like family background why they are school leavers or have not continued their studies etc.

(b) The employment rate is higher for graduates because the higher the human capital the higher will be the wage rate i.e, the higher the person is educated the higher will be the wage rate in the job. As given in question that the graduates have invested more in education then school leavers so in this term also they will get higher return from investment (education).