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Labour Market Outcomes of Young Postsecondary Graduates, 2005 to 2012

Labour Market Outcomes of Young Postsecondary Graduates, 2005 to 2012

by Kristyn Frank, Marc Frenette, and René Morissette
Social Analysis and Modelling Division

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This Economic Insights article documents the evolution of real annual wages and salaries and employment patterns of young postsecondary graduates by field of study from 2005 to 2012. Results are shown for Canadian-born individuals aged 25 to 34 who are college graduates or hold a bachelor's degree. The data are drawn from the linked 2006 Census–2011 National Household Survey–T1 Personal Master File. Fields of study are defined according to the Classification of Instructional Programs.

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Introduction

Since the recession of the late 2000s, concerns have been raised as to whether the labour market outcomes of young postsecondary graduates have deteriorated in recent years.Note 1 Given the considerable financial and time investment associated with a postsecondary education, this question is of interest to policy makers, students and their families, and postsecondary institutions.

While previous research (Finnie and Frenette 2003; Walters 2004; Ostrovsky and Frenette 2014) has established that earnings of university and college graduates differ across fields of study, it is not known whether earnings and employment patterns of graduates from different fields of study have followed a similar trajectory in recent years.Note 2

Using a novel data set (the linked 2006 Census–2011 National Household Survey (NHS)–T1 Personal Master File), the study assesses how real annual wages and salaries of young Canadian-born postsecondary graduates evolved by field of study over the 2005-to-2012 period.Note 3 It also compares employment patterns across fields of study, documenting which postsecondary graduates were more likely to be employed full time on a full-year basis, i.e., for 49 weeks or more. For both outcomes―earnings and employment patterns―results for bachelor’s degree holders and college graduates are compared to those observed for high school graduates.

Earnings increased for male postsecondary graduates in Engineering and for female postsecondary graduates in Health

In 2005, Canadian-born male and female bachelor’s degree holders aged 25 to 34 earned on average $65,400 and $46,500 (in 2012 dollars) in wages and salaries, respectively. This was more than $20,000 higher than the earnings received by their counterparts with only a high school diploma (Table 1 and Charts 1 and 2).Note 4 While young female bachelor’s degree holders saw their earnings rise from 2005 to 2012, young male bachelor’s degree holders experienced a slight decline in real earnings from 2007 to 2010 and little change afterwards. By 2012, young male and female university graduates earned 4.9% and 8.5% more, on average, than their counterparts did in 2005.

Earnings growth was not uniform across fields of study. From 2005 to 2012―a period characterized by rising oil pricesNote 5―young men with a bachelor’s degree in Engineering recorded a 10% increase in real average earnings.Note 6 In contrast, their counterparts with a bachelor’s degree in Social Sciences, Business Administration, and Mathematics, Computer, and Information Science experienced no growth in real average earnings during that period.Note 7 Even though the average real wages and salaries of young male bachelor’s degree holders in Education, were higher in 2012 than in 2005, the difference is not statistically significant at conventional levels.Note 8

Young female bachelor’s degree holders saw their average earnings rise in several fields of study. Those who graduated in Education, Health, and Business Administration recorded increases in average real wages and salaries that varied between 10% and 12% from 2005 to 2012.Note 9 In contrast, those who graduated in Humanities experienced no growth in average earnings. Changes in average earnings observed in other fields of study were not statistically significant at conventional levels.

Chart 1 Real average wages and salaries of Canadian-born male postsecondary graduates and high school graduates aged 25 to 34, 2005 to 2012

Description for chart 1

Chart 2 Real average wages and salaries of Canadian-born female postsecondary graduates and high school graduates aged 25 to 34, 2005 to 2012

Description for chart 2

Overall, depending on the field of study considered, young men with a bachelor’s degree earned on average between $9,500 and $38,900 more than young men with a high school diploma in 2012. Young women with a bachelor’s degree earned on average between $12,700 and $32,900 more than young women with a high school diploma.

Among male college graduates, average earnings reached a peak of $56,200 in 2007, fell from 2007 to 2010 and increased to $55,800 in 2012. By 2012, young male college graduates earned on average 7.1% more than their counterparts did in 2005. Young female college graduates also displayed some growth in earnings during this period but this was found to be not statistically significant.

Similar to young men with a bachelor’s degree in Engineering, young men with a college certificate in Engineering also fared well from 2005 to 2012. Their average real earnings grew by 13% during this period, rising from $56,800 in 2005 to $64,200 in 2012 (Table 2). Average real earnings of male college graduates in Mathematics, Computer, and Information Science grew at a similar pace. Male college graduates in Personal and Protective Services saw their average real earnings increase by 18%.Note 10

Young female college graduates in Health saw their average wages and salaries rise by 9% from 2005 to 2012, an increase that is similar to that experienced by young women with a bachelor’s degree in health.

Overall, Tables 1 and 2 indicate that young male postsecondary graduates in Engineering and young female postsecondary graduates in Health experienced moderate earnings growth from 2005 to 2012 while young male bachelor’s degree holders in Mathematics, Computer, and Information Science did not see their earnings rise. Nevertheless, earnings of young male college graduates in Mathematics, Computer, and Information Science did increase, along with those of young female bachelor’s degree holders in Education and Business Administration. Considering the fields of study shown in Tables 1 and 2, there is no evidence of a substantial deterioration in the earnings of young postsecondary graduates in recent years.Note 11

School enrollment rates changed little for young postsecondary graduates from 2005 to 2012

The relative stability of earnings observed from 2005 to 2012 in Tables 1 and 2 might be misleading if, in response to reduced employment opportunities, some postsecondary graduates left the labour market in 2012, earned no wages and salaries that year, and enrolled in school to pursue their schooling. If so, school enrollment rates of young postsecondary graduates should be higher in 2012 than in 2005.

Whether this is the case or not is investigated in Charts 3 and 4, using data from the Labour Force Survey (LFS). The percentage of young Canadian-born male and female postsecondary graduates enrolled in school is plotted from 2006 to 2014. Since the distinction between Canadian-born and immigrant postsecondary graduates can be made in the LFS only starting in 2006, the percentage of young postsecondary graduates―both immigrant and Canadian-born―enrolled in school is also plotted from 2005 onwards to allow inferences over the 2005-to-2012 period.

Table 1
Real annual wages and salaries of Canadian-born bachelor's degree graduates aged 25 to 34, 2005 to 2012
Table summary
This table displays the results of Real annual wages and salaries of Canadian-born bachelor's degree graduates
aged 25 to 34 Median, Mean, 2005, 2007, 2010 and 2012, calculated using 2012 dollars units of measure (appearing as column headers).
  Median Mean
2005 2007 2010 2012 2005 2007 2010 2012
2012 dollars
Men  
Education 52,513 54,589 55,046 55,393 51,140 54,036 56,104 54,344
Humanities 43,637 45,891 49,308 52,892 47,070 51,284 49,318 54,045
Social Sciences 53,517 55,294 58,109 57,000 60,690 62,182 61,639 59,738
Business Administration 64,204 63,608 62,796 62,626 72,898 78,589 76,835 72,281
Mathematics, Computer and Information Science 66,036 65,965 64,234 63,079 71,714 71,600 69,366 69,920
Engineering 71,717 72,335 71,542 75,579 75,966 82,707 78,105 83,379
All fields of study 59,936 62,497 61,975 62,626 65,388 69,882 68,513 68,563
High school graduates 39,416 40,609 38,978 39,230 43,097 44,311 44,222 44,519
Women  
Education 43,037 42,879 44,775 47,150 41,459 42,298 44,885 45,884
Humanities 37,084 34,364 36,972 38,008 39,205 37,821 38,430 38,499
Social Sciences 42,136 44,997 42,830 43,426 43,173 46,749 44,911 44,935
Business Administration 46,190 49,143 50,142 53,633 50,001 51,838 53,107 56,107
Physical and Life Sciences 47,644 48,498 47,936 49,123 50,407 49,206 49,383 51,804
Health 55,667 54,720 62,341 60,021 53,144 53,534 58,886 58,691
All fields of study 45,127 46,846 47,410 48,350 46,543 48,162 49,369 50,506
High school graduates 23,325 23,709 23,674 23,546 25,010 25,374 26,821 25,792
Table 2
Real annual wages and salaries of Canadian-born college graduates aged 25 to 34, 2005 to 2012
Table summary
This table displays the results of Real annual wages and salaries of Canadian-born college graduates aged 25 to 34 Median, Mean, 2005, 2007, 2010 and 2012, calculated using 2012 dollars units of measure (appearing as column headers).
  Median Mean
2005 2007 2010 2012 2005 2007 2010 2012
2012 dollars
Men  
Visual and Performing Arts 41,427 42,693 43,012 40,069 43,258 44,332 44,425 40,170
Social Sciences 41,550 49,389 43,057 42,839 50,574 51,374 47,405 49,567
Business Administration 45,605 46,771 45,180 42,500 50,270 52,080 50,032 48,416
Mathematics, Computer and Information Science 45,817 48,846 49,904 51,273 48,391 51,939 51,931 53,512
Engineering 52,937 57,282 54,901 59,041 56,779 63,778 59,600 64,186
Health 51,746 51,029 48,925 47,543 52,965 53,945 53,380 52,531
Personal and Protective Services 53,243 53,480 62,387 61,625 51,998 56,844 61,011 61,523
All fields of study 48,491 51,113 50,462 50,842 52,076 56,183 54,591 55,753
High school graduates 39,416 40,609 38,978 39,230 43,097 44,311 44,222 44,519
Women  
Visual and Performing Arts 30,461 30,472 35,808 31,861 29,489 29,889 32,198 32,049
Social Sciences 29,335 29,390 31,877 30,000 30,085 28,931 30,881 29,961
Business Administration 32,139 31,845 34,080 35,204 34,808 32,143 34,218 34,396
Health 34,142 35,389 36,576 36,112 33,957 36,463 37,185 36,914
Personal and Protective Services 29,100 29,280 34,901 32,671 32,886 34,040 39,337 36,306
All fields of study 31,649 31,548 34,199 33,936 33,254 32,816 34,798 34,891
High school graduates 23,325 23,709 23,674 23,546 25,010 25,374 26,821 25,792

Chart 3 Percentage of male postsecondary graduates aged 25 to 34 enrolled in school, 2005 to 2014

Description for chart 3

Chart 4 Percentage of female postsecondary graduates aged 25 to 34 enrolled in school, 2005 to 2014

Description for chart 4

For Canadian-born male and female college graduates, school enrollment rates in 2006 are very similar to those in 2012. Similarly, for all male and female college graduates, school enrollment rates in 2005 are also very similar to those in 2012.

Likewise, school enrollment rates of young Canadian-born women with a bachelor’s degree and of all young women with a bachelor’s degree are no higher in 2012 than they were in 2006.

Young Canadian-born male bachelor’s degree holders also had similar school enrollment rates in 2006 and 2012. However, since their enrollment rate trended upwards from 2006 to 2009 whereas the aggregate school enrollment of young men male bachelor’s degree holders trended downwards from 2005 to 2009, it is difficult to reach a conclusion regarding changes in school enrollment from 2005 to 2012 for the former group. Nevertheless, Charts 3 and 4 do not, overall, support the contention that school enrollment rates of young Canadian-born postsecondary graduates increased substantially from 2005 to 2012. This in turn suggests that the earnings trends shown in Tables 1 and 2 for young Canadian-born postsecondary graduates were not influenced by higher enrollment rates.

Employment patterns, 2005 to 2010Note 12

The success of individuals in the labour market can be gauged not only by their annual earnings, but also by the degree to which individuals succeed in securing full-time employment.Note 13 Of all young men with a bachelor’s degree in 2010, 82% worked full time on a full-year basis, i.e., for 49 weeks or more (Table 3 and Chart 5). In contrast, their counterparts with a high school diploma did so to a lesser extent: only 66% of them worked full year, full time that year. The percentage of young female bachelor’s degree holders working full year, full time in 2010 was, at 65%, 14 percentage points higher than the corresponding proportion for young female high school graduates (Chart 6).

Table 3
Percentage of Canadian-born bachelor's degree holders aged 25 to 34 who are employed full year, full time, 2005 and 2010
Table summary
This table displays the results of Percentage of Canadian-born bachelor's degree holders aged 25 to 34 who are employed full year 2005 and 2010, calculated using percent units of measure (appearing as column headers).
  2005 2010
percent
Men  
Education 80.0 74.2
Humanities 74.7 75.2
Social Sciences 81.1 77.8
Business Administration 87.3 82.7Note *
Physical and Life Sciences 82.6 Note F: too unreliable to be published
Mathematics, Computer and Information Science 90.2 86.0
Engineering 89.6 87.2
All fields of study 84.4 81.6Note *
High school graduates 70.2 66.2Note *
Women  
Education 62.9 57.7Note 
Humanities 56.5 67.6Note *
Social Sciences 63.6 72Note *
Business Administration 71.2 67.4
Physical and Life Sciences 70.8 61.2Note 
Health 62.4 61.3
All fields of study 65.4 65.3
High school graduates 53.7 51.2

Following the 2008/2009 recession, young men with a bachelor’s degree saw their rate of full-year full-time employment drop in 2010 relative to 2005. In contrast, overall rates of full-year, full-time employment changed little for college graduates and young female bachelor’s degree holders during that period (Tables 3 and 4).

Differences in rates of full-year, full-time employment observed across fields of study for young men with a bachelor’s degree are substantial. Both in 2005 and 2010, no more than three-quarters of young men with a bachelor’s degree in Humanities worked full year, full time, much less than the rates of 90% and 87% observed, respectively, among their counterparts in Engineering. Differences across fields of study for young female bachelor’s degree holders or for young male and female college graduates are less pronounced. For both sexes and both years, young college graduates and bachelor’s degree holders in most fields of study had higher rates of full-year, full-time employment than young high school graduates.Note 14

Table 4
Percentage of Canadian-born college graduates aged 25 to 34 who are employed full year, full time, 2005 and 2010
Table summary
This table displays the results of Percentage of Canadian-born college graduates aged
25 to 34 who are employed full year 2005 and 2010, calculated using percent units of measure (appearing as column headers).
  2005 2010
percent
Men  
Visual and Performing Arts 74.4 68.9
Social Sciences 74.9 77.1
Business Administration 79.6 81.5
Mathematics, Computer and Information Science 77.2 77.1
Engineering 78.0 76.3
Health 73.2 68.2
Personal and Protective Services 74.6 76.0
All fields of study 77.0 76.0
High school graduates 70.2 66.2Note table 4*
Women  
Visual and Performing Arts 64.1 64.1
Social Sciences 62.4 58.7
Business Administration 64.8 63.4
Health 56.5 57.1
Personal and Protective Services 54.2 61.2
All fields of study 61.1 60.5
High school graduates 53.7 51.2

Chart 5 Percentage of Canadian-born male postsecondary graduates and high school graduates aged 25 to 34 working full year, full time, 2005 and 2010

Description for chart 5

Chart 6 Percentage of Canadian-born female postsecondary graduates and high school graduates aged 25 to 34 working full year, full time, 2005 and 2010

Description for chart 6

Conclusion

The rise in youth unemployment during the recession of the late 2000s raised concerns about labour market outcomes for young postsecondary graduates. In the context of population aging, changing world commodity prices, and time-varying technological changes, it is unclear whether earnings of young postsecondary graduates from different fields of study have followed a similar trajectory in recent years.

This study has investigated this issue. The results indicate that young male postsecondary graduates in Engineering and young female postsecondary graduates in Health have experienced moderate earnings growth over the 2005-to-2012 period. Findings regarding young male postsecondary graduates in Mathematics, Computer, and Information Science are more nuanced, as young men with a bachelor’s degree in that field experienced no growth in median or average earnings while their counterparts with a college certificate saw their average and median earnings grow by about 12%. Young female bachelor’s degree holders in Business Administration and Education and young male college graduates in Personal and Protective Services also saw their median and average earnings rise.

Overall, the study did not find evidence of a substantial deterioration in the labour market outcomes of young postsecondary graduates in recent years. Although rates of full-year, full-time employment fell slightly for young male bachelor’s degree holders from 2005 to 2010, they changed little for college graduates and young female bachelor’s degree holders during that period. In aggregate, real average and real median earnings of young postsecondary graduates either had, by 2012, increased slightly relative to 2005 or shown little change.Note 15

Throughout the period, young male and female postsecondary graduates in most fields of study received higher earnings and were more likely to be employed full year, full time than their counterparts with a high school education. This fact is an important reminder that even though relative hourly wage differentials between bachelor’s degree holders and high school graduates narrowed somewhat during the 2000s (Frenette and Morissette 2014), higher education remains associated with better labour market outcomes.

Data and definitions

Data sources

This study uses data from the linked 2006 Census–2011 National Household Survey (NHS)–T1 Personal Master File. Linkage began with the 1,060,597 individuals who appeared in the 2006 Census of Population and in the 2011 NHS, identified by common information on both files. Of this group, 846,711 (79.8%) could be linked to a Social Insurance Number (SIN) on the 2010 T1 files (tax reference year for the 2011 NHS sample). Although sample selection was based on linking to the 2010 T1 data, the sample could then be linked to T1 data from other years for analytical purposes.

Almost two-thirds (64.1%) of individuals who could be linked to the 2010 T1 data consented to do so, leaving 542,715 in the sample. The sample dropped to 542,140 after eliminating individuals younger than 15 on May 16, 2006 (Census Day). A small number of records were also dropped because the reported age on the census differed from the reported age on tax data, or because of unresolved cases of multiple SIN holders. In the end, the linked file comprised 535,790 individuals, or 50.5% of the overlapping census and NHS sample.

To account for differences in characteristics between the original 2006 sample and the remaining sample on the linked file, longitudinal weights were created.Note 16 These weights ensure that the linked file is representative of the 2006 population.

From the linked file, four samples of Canadian-born individuals were selected. The first sample consists of Canadian-born individuals who were aged 25 to 34 in 2005; reported having a bachelor’s degree, a college certificate, or a high school diploma in the census reference week in 2006; had positive wages and salaries, positive weeks worked and no self-employment income in 2005; and had no educational deductions and credits in 2005 and 2006.Note 17 The last restriction ensures that the level of education reported during the census reference week is the one that individuals had when they earned their employment income in 2005. The second sample consists of Canadian-born individuals who were aged 25 to 34 in 2007; reported having a bachelor’s degree, a college certificate, or a high school diploma in the census reference week in 2006; had positive wages and salaries and no self-employment income in 2007; and had no educational deductions and credits in 2006 and 2007.Note 18 The third and fourth samples are similar to the first and second samples, respectively, but are based on NHS reference week in 2011.Note 19 These four samples permit an analysis of the evolution of real annual wages and salaries of young Canadian-born postsecondary graduates aged 25 to 34 and of their counterparts with a high school diploma over the 2005-to-2012 period.

Definitions

Bachelor’s degree: A university degree at the undergraduate level, based on the highest certificate or degree. It excludes university certificates above or below a bachelor’s degree, and first professional degrees in medicine, dentistry, veterinary medicine, or optometry. Graduates of Law (Bachelor of Law [LLB], Juris Doctor [JD] and Bachelor of Civil Law [BCL]) and Legal Research and Advanced Professional Studies (post-LLB/JD) programs were excluded from the analysis.

College certificate: A certificate awarded by a college, CEGEP, or other non-university institution (excluding registered apprenticeships or trades certificates), based on the highest certificate or degree.

Field of study: Field of study for the analysis in the late 2000s is based on the 2000 Classification of Instructional Programs (CIP) Canada 2000 codes, available for the highest certificate or degree in the 2006 Census and 2011 NHS. Fields are categorized into 11 major groups; the “Other” field of study was initially excluded because of small sample sizes. Depending on the years considered, the resulting samples vary between 8,936 and 11,624 observations for college graduates, between 7,614 and 8,765 observations for bachelor’s degree holders, and between 7,382 and 8,692 observations for high school graduates. The major fields of study considered for college graduates and bachelor’s degree holders are:

  • Education
  • Visual and Performing Arts (includes Communications Technologies)
  • Humanities
  • Social Sciences (includes Social and Behavioural Sciences and Law)
  • Business Administration (includes Management and Public Administration)
  • Physical and Life Sciences (includes Science Technologies)
  • Mathematics, Computer and Information Sciences
  • Engineering (includes Architecture and Related Technologies)
  • Agriculture and Conservation (includes Natural Resources)
  • Health (includes Parks, Recreation and Fitness)
  • Personal and Protective Services (includes Transportation Services)

Additional restrictions are imposed in Tables 1 to 4. The numbers in Tables 1 and 2 are shown for fields of study which have at least 200 observations both in 2005 and 2012. The numbers in Tables 3 and 4 are shown for fields of study which have at least 200 observations both in 2005 and 2010.

References

Finnie, R., and M. Frenette. 2003. “Earning differences by major field of study: evidence from three cohorts of recent Canadian graduates.” Economics of Education Review 22: 179–192.

Frenette, M., and R. Morissette. 2014. Wages and Full-time Employment Rates of Young High School Graduates and Bachelor’s Degree Holders, 1997 to 2012. Analytical Studies Branch Research Paper Series. no. 360. Statistics Canada Catalogue no. 11F0019M. Ottawa: Statistics Canada.

Kahn, L. 2010. “The long-term labour market consequences of graduating from college in a bad economy.” Labour Economics 17 (2): 303–316.

Oreopoulos, P., T. von Wachter, and A. Heisz. 2012.“The short and long-term career effects of graduating in a recession: Hysteresis and heterogeneity in the market for college graduates.” American Economic Journal: Applied Economics 4 (1): 1–29.

Ostrovsky, Y., and M. Frenette. 2014. The Cumulative Earnings of Postsecondary Graduates Over 20 Years: Results by Major Field of Study. Economic Insights, no. 40. Statistics Canada Catalogue no. 11-626-X. Ottawa: Statistics Canada.

Walters, D. 2004. “A comparison of labour market outcomes of postsecondary graduates of various levels and fields over a four-cohort period.” Canadian Journal of Sociology 29 (1): 1–27.

Notes

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