Postsecondary Education in Canada: Benefits and Barriers › econ › people › 4_Messacar... · Delivering insight through data for a better Canada Motivation •Postsecondary education

Delivering insight through data for a better Canada

Postsecondary Education in Canada: Benefits and Barriers

Marc Frenette† and Derek Messacar †,*

†Social Analysis and Modelling Division, Statistics Canada*Department of Economics, Memorial University of Newfoundland


Motivation

• Postsecondary education (PSE) is one of the largest financial investments in many people’s lives.

• Percentage of working-aged Canadians with PSE qualifications is increasing.

• E.g., 54.0% had PSE qualifications in 2016 compared to 48.3% in 2006.

• Student debt is also increasing.

• E.g., Over the past 10 years, Canada Student Loans has disbursed 47% more loans to 31% more students compared to the previous 10 years.

• Does it still pay to go to PSE?


Questions

• What are the long-run benefits of PSE?

• How unequal are the benefits?

• What factors impede youth from attending PSE?


Key Findings

1. The labour market earnings premiums from PSE are large but heterogeneous by level and field of study.

2. Family (“intergenerational”) characteristics play an important role in determining whether individuals pursue PSE.


Outline

1. Benefits

• Earnings

• Job characteristics

• Spill-over effects

2. Barriers

• Physical

• Financial

• Intergenerational


Benefits


• Follow a cohort of men born 1955 to 1957 for 20 years.

• 1991 Census respondents.

• Linked to tax records.

• Calculate total (inflation-adjusted) premium of PSE relative to a high school diploma.

The average lifetime earnings premium for men with a bachelor’s degree is approximately $728,000 (170%) compared to a high school diploma.


• Follow a cohort of women born 1955 to 1957 for 20 years.

• The difference between men and women is mostly driven by high-income earners.

• Premiums are larger in private sector than public sector.

• Men are more likely to work in private sector.

The average lifetime earnings premium for women with a bachelor’s degree is approximately $442,000 (140%) compared to a high school diploma.


• Engineering, Business, Health, and Physical Sciences exceed Education and Fine and Applied Arts.

• Variation is larger in Business and Engineering (private) than Health and Education (public).

• Variation is larger for men, but similar for women.

Cumulative earnings vary significantly by level and field of study.


Earnings vary considerably even among graduates

from specific fields of study that are typically

grouped together.

ECON

POLI SCI

GEO SOCANTHRO

PSYCH


• Follow two cohorts of men aged 26 to 35 in 1991 (blue solid) or 2001 (red dashed) for 14 years, who hold bachelor’s degrees.

• Initial labour market conditions were similar for both cohorts.

• Pecuniary and non-pecuniary benefits both increase across cohorts.

Median cumulative earnings were higher among members of the more recent cohort of PSE graduates, for both men and women.


• Follow two cohorts of women aged 26 to 35 in 1991 (blue solid) or 2001 (red dashed) for 14 years, who hold bachelor’s degrees.

• Comparative results are similar for men and women.

• Median earnings and growth rates are smaller for women than men.

• However, growth in pension plan coverage is larger for women.

For men and women, increases in cumulative earnings across cohorts were observed for most disciplines. No discipline registered a decline in cumulative earnings.


12

Young males with bachelor’s degrees incurred a slight drop in real earnings from 2007 to 2010 and little change afterwards. By 2012, they earned 4.9% more than their 2005

counterparts.


13

Young female bachelor’s degree holders experienced a rise in their real earnings from 2005 to 2012. By 2012, they earned 8.5% more than their 2005 counterparts.


Certificate and diploma holders earn about the same 2 years after graduation across institution types. However, bachelor's degree holders from colleges earn about 12%

more, on average, than from universities.

• College bachelor’s degree holders tend to enroll in such programs as Business, Management, Public Administration and Health.

• Program choice explains 90% of the pay premium of Bachelor’s degrees from colleges over universities


Only approximately 5% of Bachelor’s degrees are obtained from colleges. Those from universities are at least 5 times more likely to go on to enroll in graduate studies.


• The occupational skill requirements of jobs held by younger Canadians (aged 25 to 34) generally increase with educational attainment.

There is a positive relationship between schooling investments and job outcomes.


• Without university, the job requirements are lower for men than for women in reading comprehension, writing and social skills but higher for maintenance and technical operation.

• With university, the job requirements are similar in most skill areas between men and women.

There is a positive relationship between schooling investments and job outcomes.


Greater educational attainment is associated with higher home values, a lower likelihood of having a mortgage by the age of retirement, and a lower likelihood of

renting by the mid-30s.


Barriers


High school students living beyond commuting distance from a university are far less likely to attend. However, an uptake in college participation almost completely

counterbalances the difference in university participation.


• Students from low-income and middle-income families are more

likely to attend PSE when they live in commuting distance,

compared to those from high-income families.

Travel costs deter students in less-favourable economic circumstances from PSE.


• Percent of 19-year-olds enrolled in PSE has increased, particularly at the bottom of the

parental income distribution.

• Youth from high-income families continue to be much more likely to attend PSE.

• Trends were similar between men and women.

PSE enrollment is increasing over time for children from all family income levels.


Among families with at least one child, investments in registered education savings plans (RESPs) were positively associated with family income, net wealth, and parental education.


• Registered education savings plans (RESPs) raise PSE attendance rates, after controlling for many factors such as academic achievement and family characteristics.

• This association is stronger at younger ages, and for men compared to women.

PSE attendance rates are higher for youth with RESPs than for those without.


How do parents contribute to registered education savings plans (RESPs)? Each 1% increase in RESP savings is associated with a 4.1% reduction in childcare spending.

There are no discernible effects on other types of household expenditures.


Concluding remarks

• Returns to PSE are potentially large, but typically concentrated in such fields as Business, Engineering, Sciences and Health.

• Private sector salaries exceed public sector salaries at the top of the distribution, leading to gender differences in average pay.

• Although degree-granting from colleges is new and emerging, their returns are large due primarily to selection of fields of study.

• Financial circumstances of students and their parents are a significant barrier to PSE attendance and completion.


Contact information

Marc [email protected]

Derek Messacar

[email protected]

mailto:[email protected]

mailto:[email protected]

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Postsecondary Education in Canada: Benefits and Barriers › econ › people › 4_Messacar... · Delivering insight through data for a better Canada Motivation •Postsecondary education