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Labour market outcomes of graduates from universities in the Maritime provinces Insights on Canadian Society
Labour market outcomes of graduates from universities in the Maritime provinces

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by Diane Galarneau, Christine Hinchley and Aimé Ntwari

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Introduction

Labour market transitions and outcomes of postsecondary graduates have always been a topic of interest for policy makers, students, their families and postsecondary institutions. Although higher levels of education are usually associated with better labour market outcomes,^{Note 1} postsecondary education requires considerable financial and time investment and may not always provide the expected returns, particularly around recessions.^{Note 2}

Statistics Canada has recently developed the Education Longitudinal Linkage Platform (ELLP), which allows for the combination of administrative data on the Postsecondary Student Information System (PSIS) with other databases to enable longitudinal analysis and a better understanding of labour market outcomes following graduation (see “Data sources, methods and definitions”). A pilot project^{Note 3} was recently undertaken using the ELLP to examine the outcomes of graduates from Maritime universities from 2006 to 2011 by combining PSIS data for Prince Edward Island, Nova Scotia and New Brunswick with personal income tax data.^{Note 4} Over the years, the platform will also allow for the addition of more information from multiple sources, which will provide a better understanding of the factors behind access to postsecondary education (PSE), persistence and success in PSE, and the labour market outcomes of graduates.

Using that new dataset, this article looks at the labour market outcomes of graduates from the Maritime universities, with a special focus on differences by year of graduation. Canadian and international economies experienced significant shifts from 2006 to 2011 due to recessions in Canada, the United States and Europe, credit crises and variations in commodity prices. These events may have affected the availability of jobs in the Maritimes and across Canada, and they may have presented different challenges to graduates entering the labour market before and after the 2008-2009 recession. The new dataset therefore provides a unique opportunity to compare the economic outcomes of graduates who earned their degree between 2006 and 2008 with those of later cohorts.

Specifically, this paper examines the employment earnings and employment insurance (EI) benefits of university graduates and provides an overview of job quality indicators such as unionization (based on union contributions), pension plan coverage (based on private pension plan contributions) and the proportion of those who are employed in low value-added service industries. In addition to presenting the outcomes by cohort, results are also shown for men and women, by education level (for undergraduate and graduate degree holders), and by field of study. The analysis focuses on individuals who graduated prior to the age of 35^{Note 5} who also completed an income tax return and did not pursue their education on a full-time basis after graduating.^{Note 6} Individuals who reported self-employment earnings^{Note 7} were excluded.

Tax data can also be used to identify the place of residence of graduates at different points in time. This information can be used to calculate a regional retention rate that corresponds, in this paper, to the number of graduates still living in one of the three Maritime provinces, one year after graduating, as a proportion of all graduates who obtained a degree from Maritime universities. The retention rate is discussed in a box at the end of the article (see “Retention of Maritime university graduates”), with results shown by place of origin, sex and field of study.

Profile of Maritime university graduates

This analysis is based on a population of 37,425 individuals under the age of 35 ─ or about 6,200 people each year ─ who graduated with an undergraduate degree (i.e. a bachelor's degree) from the universities of Prince Edward Island, Nova Scotia and New Brunswick, and met the criteria described above. The sample also includes 6,740 individuals (about 1,100 per year) who obtained a graduate degree (master’s degree or doctorate) over the same period.^{Note 8}

In this population of graduates, nearly two-thirds (62%) were female. The proportion was similar across education levels (undergraduate and graduate degrees) and across cohorts. A little more than 5% of the undergraduate degree holders graduated in Prince Edward Island, 58% in Nova Scotia and 37% in New Brunswick. Among those who obtained a graduate degree, 2% did so in Prince Edward Island, 77% in Nova Scotia and 21% in New Brunswick.

At the undergraduate level, more than three-quarters (78%) of women graduated from four fields of study, while just over two-thirds (69%) of men came from four disciplines (Chart 1). The most common fields also differed by sex. For women, the top fields (in descending order) were health and related fields; social and behavioural sciences and law; business, management and public administration; and education. Among men, the top fields were business, management and public administration; architecture, engineering and related technologies; social and behavioural sciences and law; and humanities.

At the graduate level (master’s degree and doctorate), 73% of female graduates were in four fields of study, while 71% of males graduated from four fields. Once again, the top fields differed by sex. Among women, the top four fields were the same as those of undergraduate degree holders, except that education was the top field rather than health and related fields. Among men, business, management and public administration, as well as architecture, engineering and related technologies remained among the four most popular fields of study, followed by physical and life sciences and technologies and education.

Most graduates reported employment earnings in their first year after graduating

During their first year after graduating, most graduates had a paid job at some point—at least 95% of them reported employment earnings on their tax return (Table 1). This proportion was similar for each cohort of graduates and for both levels of education.

The proportion of undergraduate degree holders who had received employment insurance benefits (EI) one year after graduating increased from 14% to 18% for the 2006 and 2009 cohorts, but decreased to 15% for the most recent cohort (2011).^{Note 9} Although they were less likely to report receiving EI benefits, similar trends were observed among cohorts with a graduate degree. Very few graduates received social assistance benefits the year after graduating (less than 1% for all cohorts and both levels of education).

Declines in first-year earnings began with the 2009 cohort

From 2006 to 2008, the median first-year earnings^{Note 10} of undergraduate degree holders remained relatively constant, at around $35,000 (Table 2). Over the same period, it grew from $53,200 to $56,100 among graduate degree holders.

The years 2008 and 2009 were characterized by the most important economic downturn since the beginning of the 1990s in Canada. Between 2008 and 2009, the first-year earnings of graduates declined by 8%—both at the undergraduate and graduate levels. These differences represented a decline of nearly $3,000 for undergraduate degree holders and a decline of $4,500 for graduate degree holders. Subsequent cohorts in 2010 and 2011 did not recover from the decline.

These trends were similar for both male and female graduates (Chart 2). In both cases, first-year earnings decreased between the 2008 and 2009 cohorts, and subsequent cohorts did not recover.^{Note 11}

Although most graduates held a job at some point during their first year after graduating, the data do not provide any indication as to whether the job was full time or part time, or whether it was held part of the year or throughout the entire year. The new dataset on Maritime university graduates also does not provide information about the number of hours worked during the year, or whether the job is in the same field of study. However, additional insight can be obtained by examining the distribution of graduates across earnings categories.

Between 2006 and 2011, the proportion of undergraduate degree holders who earned between $0 and $10,000 remained relatively stable from one cohort to the next, varying between 11% and 12%.

The proportion of those earning between $10,001 and $30,000, however, grew by 4 percentage points between the 2006 and 2009 cohorts; the largest increase was observed between the 2008 and 2009 cohorts. Conversely, the proportion of those earning between $30,001 and $50,000 decreased during the same period, while the proportion earning more than $50,000 fluctuated between 23% and 26%.

Similar trends were observed among graduate degree holders. There was an increase in the $10,001 to $30,000 category and a decrease in the two highest earnings classes; most of the changes occurred between the 2008 and 2009 cohorts.

These shifts in earnings classes may be the result of a reduction in working hours from one cohort to the next,^{Note 12} but they could also be due to a higher proportion of graduates working in low-paid jobs. Tax data do not provide information on working hours, but they do provide information about the industries in which graduates are employed. Additional insight can thus be obtained by examining the proportion of workers in low value-added service industries, which are defined in this paper as retail trade, accommodation and food services, and other services. On average, jobs in these industries offer lower wages and fewer benefits than jobs in other sectors.^{Note 13}

The proportion of undergraduate degree holders working in such industries increased from 15% to 19% between the 2006 and 2009 cohorts; most of the increase occurred between the 2008 and 2009 cohorts. Among graduate degree holders, the proportion working in low value-added service industries was smaller and fluctuated less over the period. This raises the possibility of an increasing proportion of undergraduate degree holders who may have had no other option but to work in low-paid jobs because of a deterioration in labour market conditions. However, the data do not contain any information on the reasons for working in a given industry.

Lastly, two other important job quality indicators available from the Maritime university graduate dataset are the unionization rate and private pension plan coverage. Using tax data, unionization can be approximated by the proportion of graduates who reported union contributions. While this proportion fluctuated from cohort to cohort, the results do not point to a long-term growth or decline across cohorts. Of note, graduate degree holders were more likely to report union contributions (with proportions between 48% and 53%) than undergraduate degree holders (between 36% and 40%).

Similarly, graduates covered by a private pension plan can be approximated by the proportion of graduates who reported contributions to a registered pension plan. This proportion fluctuated from cohort to cohort in the year after graduation, ranging between 32% and 37% for undergraduate degree holders and from 49% to 55% for graduate degree holders.

Declines in first-year earnings took place in nearly all fields of study

Earnings in the first year following graduation vary considerably across fields of study.^{Note 14} Male bachelor's degree holders from the 2008 cohort, for example, had median first-year earnings of $37,100, but that amount varied between a high of $55,700 in health and related fields^{Note 15} and a low of $14,700 in visual and performing arts and communications technologies (Table 3). It is important to note, however, that not all graduates were working in occupations corresponding to their field of study.^{Note 16}

Among female bachelor's degree holders from the same cohort, the overall median was $33,800, but varied between $65,600 in health and related fields and $16,700 in visual and performing arts and communications technologies. Similar variations across fields were seen for those in other cohorts.

In most fields of study, first-year earnings declined between the 2008 and 2011 cohorts. Male undergraduate degree holders with a degree in health and related fields (-25%) and education (-21%) experienced the largest declines. For their female counterparts, the largest declines were seen among those with a degree in mathematics and computer and information sciences, and education (-24% for both).

Among male graduate degree holders, the largest declines were in humanities (-42%), physical and life sciences (-23%), and mathematics and computer and information sciences (-21%). Large declines were also seen among their female counterparts with a graduate degree in social and behavioural sciences and law (-24%), agriculture, natural resources and conservation (-24%), and mathematics and computer and information sciences (-23%).

Graduates who left the Maritimes also saw declines in first-year earnings

Although all graduates examined in this article obtained their degree in one of the three Maritime provinces, one-third reported another region of residence on their tax return one year after graduating.^{Note 17} Many of those who left the Maritimes originated from outside the Maritimes, which suggests that some may have returned to their region of origin (for additional details on region of residence after graduating, see “Retention of Maritime university graduates”). Examining the first-year earnings of graduates by region of residence is important, given that labour market conditions may differ from one region to the next.

In general, graduates from Maritime universities who left the region earned more in their first year than those who stayed in the Maritimes (Table 4). These gaps reflect many factors such as the differences in the characteristics of the graduates who moved compared to those who did not move, and differences in economic conditions across regions as well as the cost of living.

However, both stayers and leavers experienced similar declines in their first-year earnings between the 2008 and 2011 cohorts, with the exception of men with an undergraduate degree. Among them, the decline was lower for those who left (-2%) than for those who stayed (-10%).

First-year earnings declined after 2008 for undergraduate degree holders even after accounting for other factors

Which factors explain the decline in first-year earnings of graduates from Maritime universities? One possibility is the economic recession of 2008/2009, while another is the potentially changing characteristics of graduates from one cohort to the next. To isolate the possible impact of the recession, a model was estimated by taking the year of graduation into account, as well as demographic and field of study differences across cohorts (Table 5).^{Note 18}

Among undergraduates, the decline in first-year earnings remained significant for the three cohorts who graduated after 2008. This supports the view that the 2008/2009 downturn might have played a role in the declining first-year earnings of undergraduates. Even after taking demographic and field of study differences into account, undergraduate students who graduated in 2009 earned 8% less than those who graduated in 2008, while those who graduated in 2010 and 2011 earned 10% and 11% less, respectively. Among graduate degree holders, however, the differences in first-year earnings between the 2008 cohort and other cohorts were not significant.^{Note 19}

Did graduates from the 2009 cohort eventually recover from the decline?

Cohorts of undergraduate degree holders were followed over three years to see if those from the 2009 cohort, who had significantly lower earnings than earlier cohorts, eventually recovered.^{Note 20}

Undergraduate degree holders of both sexes from the 2006 and 2007 cohorts followed a similar trajectory over their first three years after graduating (Chart 3). However, the next two cohorts, in 2008 and 2009, generally had lower earnings in all three years of observation compared with the preceding cohorts; the largest decline between cohorts was registered for the 2009 cohort. The gap between the cohorts did not narrow over subsequent years. This means that graduates from the 2009 cohort did not experience a decline in earnings in their first year only, but also in subsequent years.

Other studies have documented the earnings penalty associated with entering the labour market during recessionary years.^{Note 21} The lasting effects of entering the labour market during a downturn can vary, depending on the economic activity following the recessionary years. Although this study does not formally evaluate the role of the recession, the descriptive results are at least consistent with the notion that economic conditions shortly after graduation generally mattered for Maritime university graduates.

Conclusion

This article highlighted some of the results of a new dataset on the labour market outcomes of graduates of universities in Prince Edward Island, Nova Scotia and New Brunswick who earned their degree between 2006 and 2011. As the Education Longitudinal Linkage Platform (ELLP) used to create this new dataset will be developed over time, the same kind of analysis will eventually be possible at the Pan–Canadian level.

Data showed that even though most undergraduate degree holders from the Maritime universities were employed at some point during their first year after graduating, there was a clear downward trend in the first-year earnings of those who graduated in 2009, 2010 or 2011 compared with previous cohorts. The relationship with the graduation year remained significant even after accounting for differences in demographic and field of study characteristics across cohorts. Graduate degree holders also registered a decrease in their first-year earnings after 2008, but the decline was not significant after taking other factors into account.

The new dataset also showed that for some graduates, the earnings gap across cohorts did not narrow in subsequent years: three years after graduating, undergraduate degree holders from the 2009 cohort still earned significantly less than those who graduated in 2008. Future data will show whether this gap will eventually close over the years.

Lastly, the ELLP also allows for an examination of the retention patterns of university graduates from the Maritime provinces. The results of this study indicate that two-thirds of the graduates were still living in the Maritimes one year after graduating. Those in the field of education were the most likely to stay in that region while those in architecture, engineering and related technologies were the least likely to stay.

Diane Galarneau, Christine Hinchley and Aimé Ntwari are analysts with the Section of Special Projects related to postsecondary education, in the Centre for Education Statistics at Statistics Canada.

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