Insights on Canadian Society
Results from the 2016 Census: Is field of study a factor in the payoff of a graduate degree?

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by Katherine Wall, John Zhao, Sarah-Jane Ferguson and Carlos Rodriguez

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Today, Insights on Canadian Society is releasing a study based on 2016 Census data. This study uses Census data on the highest level of education, field of study, and earnings.

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Introduction

Canadians are increasingly highly educated, with many continuing their education beyond the bachelor’s level to complete a master’s degree or an earned doctorate. From 2006 to 2016, the number of Canadians aged 25 to 64 with a master’s degree or an earned doctorate rose by more than 40%, to nearly 1.3 million (representing 7% of the population in this age group). Among younger people, the proportion was even larger: close to 9% of Canadians aged 35 to 44 had a master’s degree or a doctorate, compared with 5% of those aged 55 to 64.^Note

While large investments of time and money (including foregone earnings while in school) are required to complete any degree, this is particularly true for higher degrees. Hence, the earnings associated with these graduate degrees are of key importance to students making decisions about their education. This information is also important for policy makers, who seek to understand the labour demand for master’s and doctorate degree holders in different fields, particularly given the growth of the knowledge-based economy.^Note

There is a substantial body of literature demonstrating that the earnings of people with the same level of education can vary widely by field of study. Most studies have found that graduates of more applied fields, including engineering, health and business, have higher earnings than graduates of the biological sciences, humanities, fine arts and social sciences fields.^Note There is also evidence that the earnings differences between fields become smaller as the time since graduation increases.^Note

Several studies have specifically examined the earnings of graduate degrees by field of study.^Note They have shown that the fields of study associated with the highest earnings are different for graduate degrees than for bachelor’s degrees; for example, many engineering fields have above-average wages at the bachelor’s level, but not at the master’s level.^Note

This article makes several contributions to the literature. First, it uses recent data from the 2016 Census to examine the earnings difference between those who have a bachelor’s degree and those who have a master’s degree or a doctorate within each field of study.^Note The study does this by using a quantile regression to generate the predicted median earnings associated with each field of study for each level of education (see the Data sources, methods and definitions section), which allows it to control for other factors that may affect earnings. If graduate degrees in a certain field of study are associated with earnings similar to those of a bachelor’s degree in the same field, there may be a lower financial incentive for students in that field to pursue graduate studies.^Note

Second, this article is the first to examine the earnings of graduate degree holders using the new Statistics Canada classification of fields of study known as STEM and BHASE. STEM fields include science, technology, engineering and mathematics, while BHASE (also referred to as non-STEM) fields include business, health, arts, social sciences and education.^Note STEM fields have attracted considerable policy interest as contributors to innovation and economic competitiveness.^Note At the same time, BHASE fields bring much needed skills in the Canadian labour market, for instance in the legal system, the health care system, schools, and businesses. This classification allows analysis of the labour market outcomes of STEM graduates compared with those in other fields of study.

The target population for this article includes paid employees aged 30 to 59 who worked full year and full time during the year preceding the census (in 2015) and whose highest educational qualification was a bachelor’s, master’s or earned doctorate degree they obtained in Canada (non-permanent residents are excluded).^Note The article will begin by providing contextual information about the distribution of fields of study at the bachelor’s, master’s and doctoral levels. It will then proceed to a discussion of the earnings of bachelor’s, master’s and doctorate degree holders, for the aggregate STEM and BHASE groupings and for specific fields of study.

More than three-quarters of bachelor’s and master’s degrees were in BHASE fields, while the majority of doctorates were in STEM fields

Among adult Canadians working as full-year, full-time employees, more than three-quarters of bachelor’s degrees (77%) and master’s degrees (78%) were in BHASE (non-STEM) fields (Table 1). At the master’s level, business and related studies was the most common field of study, accounting for one-quarter (25%) of master’s degrees. The next most common fields were education and teaching (13%) and social and behavioural sciences (11%). These three BHASE fields were also the three most common fields of study at the bachelor’s level.

In contrast, more than one-half (58%) of earned doctorates were in STEM fields. More than one-third (37%) of doctorates were in the STEM science and science technology fields, which accounted for less than 10% of all bachelor’s and master’s degrees. Another 16% of doctorates were in the STEM engineering field, compared with 9% of bachelor’s and master’s degrees. The most common BHASE field for doctorates was social and behavioural sciences, at over 17%. Degrees in business and related studies were much less common at the doctoral level than at the bachelor’s and master’s levels, making up less than 3% of earned doctorates.

There were differences in the fields of study pursued by women and men; men were more likely to study in STEM fields while women were more likely to study in BHASE fields (Table 2). At all levels (bachelor’s, master’s and doctoral), engineering was more common among men than women. For example, 15% of men who had a master’s degree and 23% of those who had a doctorate studied in engineering. In comparison, less than 6% of women with a doctorate and over 3% of those with a master’s degree graduated from an engineering program.

Men were also more likely than women to study in the BHASE business and related studies field, particularly at the master’s level. That field accounted for one-third (33%) of master’s degrees among men compared with less than one-fifth (18%) among women.

Conversely, education and teaching was more common among women than men at all levels. For example, at the master’s level, it made up 19% of degrees among women and was their most common field of study, while it made up 8% of master’s degrees among men. Social and behavioural sciences made up about one-quarter of doctorates for women, compared with less than one-half that proportion (12%) for men, mainly because women were more likely than men to earn a doctorate in psychology (14% versus 4%).^Note

The earnings difference associated with graduate degrees was larger among women than men

Taken together, women with a master’s degree earned 13% more than those with a bachelor’s degree, and women with a doctorate earned 10% more than those with a master’s degree (Chart 1). Among men, the differences were smaller, at 11% for a master’s degree over a bachelor’s degree, and 5% for a doctorate over a master’s degree. This is consistent with literature finding that the returns from university degrees are larger for women than men.^Note Notably, the earnings advantage of having a master’s degree was larger than that of a doctorate, despite a master’s degree typically taking two years to complete while a doctorate typically takes five to six years.^Note

However, the results described above are in part due to the composition of fields of study at the bachelor’s, master’s and doctoral levels. Men with a bachelor’s degree, for instance, are more likely than women to have a degree in STEM, which typically pays more than BHASE fields, at least at the bachelor’s level. It is therefore more informative to break down earnings advantages by field of study.

The earnings advantage associated with a master’s degree was larger in BHASE fields than in STEM fields

In 2016, women with a bachelor’s degree in BHASE who worked full year and full time earned $74,700, compared with $80,000 for their STEM counterparts (Chart 2). Among men with a bachelor’s degree who worked full year and full time, the difference was even larger ($85,500 for those in BHASE fields versus $99,700 for those in STEM fields).^Note

At the master’s level, however, there was little difference in median earnings between full-year, full-time workers with a degree in BHASE and those with a degree in STEM, which suggests that having a master’s degree in BHASE has a greater influence on earnings than having a master’s degree in STEM.

Specifically, men and women with a master’s degree in a BHASE field earned 17% and 14% more, respectively, than their counterparts who only had a bachelor’s degree in BHASE (Chart 3). In contrast, among those who had a master’s degree in a STEM field, the same percentages were 6% for women and 1% for men.^Note

The situation was somewhat different between men and women who had a doctorate. Among women, those with a doctorate in BHASE earned 13% more than those with a master’s degree, while those with a doctorate in STEM earned 4% more. Likewise, women doctorate holders in BHASE fields had higher earnings, at $96,400, than doctorate holders in STEM fields, at $88,400.

Among men, the situation was the opposite: the earnings advantage of having a doctorate over a master’s degree was higher in STEM fields (7%) than in BHASE fields (1%); doctorate holders in STEM fields typically earned $108,100, compared with $101,100 for doctorate holders in BHASE fields.

In the 2010 National Graduates Survey, approximately one-half of people pursuing an earned doctorate reported that they were doing so in order to become a university professor.^Note Doctorate holders who were professors^Note typically had higher earnings than those who worked in other occupations. In BHASE fields, 45% of doctorate holders worked as university professors or lecturers, compared with 27% of STEM doctorate holders. STEM doctorate holders who were not professors, however, typically had other occupations closely related to their field of study. In the following sections, results are examined separately for each field within BHASE and STEM categories. The analysis begins by discussing results for BHASE fields.

In BHASE fields, the largest earnings difference between master’s degree holders and bachelor’s degree holders was in business and related studies

For most BHASE subfields, earnings were significantly higher for those with a master’s degree relative to those with a bachelor’s degree; the exceptions were women and men with a master’s degree in law, and men with a master’s degree in humanities or nursing (Table 3). The earnings advantage of having a doctorate over a bachelor’s degree or a master’s degree also appeared to be larger for women than for men, particularly in social and behavioural sciences, business and related studies, and law.

Business and related studies

Among full-year, full-time workers with a master’s degree, the most common field of study was business and related studies, in large part because of the popularity of programs such as MBAs. Among those whose highest level of education was a master’s degree, just under one-fifth (18%) of women and one-third (33%) of men had such a degree. Of these, nearly one-half (49%) specified that they held a master’s of business administration (MBA).^Note

The earnings advantage of having a master’s degree over a bachelor’s degree in business and related studies was relatively large. Women and men with a master’s degree in business and related studies earned 28% and 27% more, respectively, than those with a bachelor’s degree in the same field.^Note This is consistent with other studies, which also found that the rate of return for a master’s degree was highest in the commerce fields.^Note

Such results are partially due to changes in the occupational profile. Those with a master’s degree in business and related studies were more likely to work as senior and specialized managers (38%) than those with a bachelor’s degree in the same field (24%).^Note They also had higher earnings than bachelor’s degree holders in these occupations; for example, among men, specialized managers with a bachelor’s degree in business and related studies earned $108,000, while those with a master’s degree earned $126,400.

Similar results were found for those who had a master’s degree in public administration (MPA), with earnings advantages of 28% for women and 18% for men.^Note One-third of those with an MPA (33%) worked as senior or specialized managers, while another 28% worked as policy and program researchers, consultants and officers.

Social and behavioural sciences

In 2016, after business and related studies, education and teaching and social and behavioural sciences were the second and third most common fields of study at the master’s degree level for the target population of this article. Both were more commonly studied by women than men: together, they made up about one third of master’s degrees and doctorates among women. More particularly, social and behavioural sciences made up about one-quarter of doctorates among women; its psychology subfields alone accounted for 14% of women’s doctorates.

Among women, those who had a master’s degree in social and behavioural sciences earned 19% more than those with a bachelor’s degree in the same field, and those with a doctorate earned 21% more than those with a master’s degree. Among men, the differences were lower than for women, at 10% for a master’s degree over a bachelor’s degree, and 15% for a doctorate over a master’s degree.^Note

These earnings differences are likely related to the fact that those graduating with a master’s degree in social and behavioural sciences—which includes psychology and social sciences—are more likely to work in occupations related to their field of study.^Note At the bachelor’s level, those in both the social science and psychology subfields were spread across a wide range of occupations, with 15% working in occupations that required a high school diploma or less. At the graduate level, however, 28% of those with a master’s degree in social sciences worked as policy and program researchers, consultants and officers, while the majority of those with a doctorate worked as university professors and lecturers (56%). In the psychology subfield, one-quarter (26%) of those with a master’s degree and 47% of those with a doctorate worked as psychologists.

Education and teaching

In education and teaching, men with a master’s degree earned 15% more than those with a bachelor’s degree, and men with a doctorate earned 13% more than those with a master’s degree. Among women, the same percentages were 12% for a master’s degree over a bachelor’s degree, and 11% for a doctorate over a master’s degree.

In contrast to the trend in social and behavioural sciences, graduate degree holders in education and teaching were less occupationally concentrated than bachelor’s degree holders. While nearly 4 in 5 (79%) people with a bachelor’s degree in education and teaching worked as elementary or secondary school teachers, a little over one-half (51%) of those with a master’s degree and 15% of those with a doctorate in the field did so. Nearly one-fifth (19%) of those with a master’s degree in education and teaching worked as school principals and superintendents,^Note an occupation with higher earnings ($109,000) than those of teachers with a master’s degree ($85,800). Men with a master’s degree in education and teaching were more likely to work as school principals and superintendents (28%) than women (15%). At the doctoral level, 43% of education and teaching degree holders worked as university professors and lecturers, who had median earnings of $106,400; another 12% worked either as school principals and superintendents or as managers in postsecondary education,^Note with median earnings of $124,000.

Previous studies found that graduate degrees increase the probability of working in a professional or managerial position, particularly in predominantly female fields of study,^Note and that occupation plays a large role in the increases in earnings associated with higher education generally.^Note The above findings indicate that occupation is related to the higher earnings associated with master’s degrees and doctorates, but this relationship can take different forms. In social and behavioural sciences, the higher earnings associated with graduate degrees were partially because graduate degree holders were more likely than bachelor’s degree holders to find work related to their field of study. In education and teaching, both bachelor’s and graduate degree holders worked in occupations related to their field, but graduate degree holders had more upward mobility and were more likely to move into management positions such as school principal.

Humanities

Contrary to what was found in most other BHASE fields, men with a master’s degree in the humanities earned less than men with a bachelor’s degree in the same field. This is related to the fact that the subfield of theology and religious vocations accounted for more than one-third (38%) of master’s degrees in the humanities among men, compared with 8% of bachelor’s degrees in the humanities. Men with a master’s degree in theology and religious occupations earned $63,000, while the earnings of men in other humanities subfields were $76,100 for those with a master’s degree and $73,800 for those with a bachelor’s degree.^Note A master’s degree in theology and religious vocations is a common choice for people who intend to work as clergy: 6 in 10 (61%) men with a master’s degree in this field worked in professional occupations in religion, which had relatively low earnings compared with other occupations requiring a university degree. 

The effect of degrees in theology and religious vocations was less pronounced at the doctoral level, where they accounted for a smaller proportion (11%) of humanities degrees than at the master’s level. Men with a doctorate in the humanities earned 15% more than those with a bachelor’s degree in the humanities.

In contrast to men, women with a master’s degree in humanities were less likely to have studied theology and religious vocations (17% did so) and had moderately higher earnings than their counterparts with a bachelor’s degree (13%). Women with a doctorate in the humanities also earned significantly more than those with a bachelor’s degree (38%); 54% worked as professors, with earnings of $103,000.

Other BHASE programs

Programs like law (LLB), pharmacy and related programs (such as BPharm) and nursing (such as BSc or BScN) are technical degrees directed at giving their students the skills and qualifications for a specific occupation. Degrees in law and pharmacy, while classified as bachelor’s degrees, may take longer than the four years needed for most undergraduate programs. These programs are among the highest-earning fields of study at the bachelor’s level (with the exception of nursing among men), are relatively uncommon among graduate studies, and have high levels of occupational concentration.

In law and pharmacy and related programs, the occupational profile does not change much with a master’s degree. The majority of law degree holders worked as lawyers^Note (55% among bachelor’s degree holders, and 57% among master’s degree holders) and the large majority of pharmacy and related program degree holders worked as pharmacists (88% among bachelor’s degree holders and 75% among master’s degree holders).

The earnings of master’s degree holders in law were statistically equivalent to those of bachelor’s degree holders in that program. However, in pharmacy and related programs, male and female master’s degree holders earned almost 20% more than those with a bachelor’s degree. This difference could be attributed to a difference in their place of work: pharmacists with a master’s degree predominantly worked in hospitals (77%), while those with a bachelor’s degree mainly worked in drug stores (76%).^Note

In nursing, women with a master’s degree earned 10% more than those with a bachelor’s degree. As with other BHASE fields, this was related to a change in occupational profile. While 80% of women with a bachelor’s degree in nursing worked as registered nurses,^Note at the master’s level fewer (38%) worked as registered nurses, and 25% worked as allied primary health practitioners (a category that includes nurse practitioners). Women who worked as registered nurses earned $83,200 with a bachelor’s degree and $90,700 with a master’s degree, while women with a master’s degree who worked as allied primary health practitioners earned $101,400.

Little difference in earnings between master’s degree holders and bachelor’s degree holders in most STEM fields

Contrary to BHASE fields, there was little difference in the earnings of master’s degree holders and bachelor’s degree holders (less than 10%) in most STEM fields. In STEM, the occupational profile often didn’t change with graduate studies, which may explain why there were fewer differences in earnings between master’s degree holders and bachelor’s degree holders. In most programs, however, those with a doctorate typically earned more than those with a master’s degree in the same field (Table 4).

Engineering

In engineering, both men and women with a master’s degree earned approximately the same as those with a bachelor’s degree in the field. This is likely because there was little change in occupation associated with a master’s degree: 47% of those with a bachelor’s degree in engineering worked as engineers,^Note as did 51% of those with a master’s degree. Engineers with a master’s degree earned $105,100, essentially the same as engineers with a bachelor’s degree ($105,200).

At the doctoral level, women with a doctorate in engineering had earnings that were statistically equivalent to the earnings of those with a bachelor’s degree in the field, while men earned 8% more than those with a bachelor’s degree. More than one-third (37%) of doctorate degree holders in engineering worked as engineers and earned only slightly more ($108,500) than engineers with a master’s or bachelor’s degree; one-quarter (25%) worked as university professors and had earnings of $127,700.

These findings raise the question as to why degrees in engineering are common at the graduate level. Among men, they account for 15% of master’s degrees and 23% of doctorates. A possible explanation could be that immigrants made up the majority (50%) of people who completed their engineering master’s degree in Canada, while nearly two-thirds (65%) of them completed an engineering doctorate in Canada. The high educational attainment of immigrants to Canada is well-documented, as are the challenges faced by immigrants with educational credentials from outside Canada.^Note

It is likely that immigrants with a degree in engineering from outside Canada will complete a graduate degree in engineering after arriving in Canada in order to earn Canadian educational credentials that are recognized by employers.^Note Both immigrants and non-immigrants might also complete graduate degrees in engineering in order to conduct more in-depth research on a specific topic, or to obtain the skills and knowledge necessary to work on a specific project.

Biological sciences and physical and chemical sciences

Women with a master’s degree in biological sciences and physical and chemical sciences earned 8% more than those who had a bachelor’s degree in the same field; among men, the same figure was lower, at 4% for biological sciences and less than 2% for physical and chemical sciences. At the doctoral level, men earned more than their counterparts with a master’s degree by a margin of 12% to 15%; among women, the same percentages were 5% for those in biological sciences and 10% for those in physical and chemical sciences.

When the earnings of doctorate holders were compared with those of bachelor’s degree holders, the results were similar for women and men. In biological sciences, earnings were 18% higher for women and 19% higher for men with a doctorate; in physical and chemical sciences, earnings were 13% higher for women and 14% higher for men with a doctorate.

Despite these results, biological sciences and physical and chemical sciences were among the lowest-paying fields among women with a doctorate. The proportion of women with doctorates who worked as professors was 26% in biological sciences and 22% in physical and chemical sciences, lower than in most other fields; they had earnings of $106,500. Those who were not professors typically had occupations related to their fields of study, but with lower pay than professors, for example, biologists ($83,100) and chemists ($86,100). In addition, 8% worked as postsecondary teaching or research assistants, who earned $54,500.

Computer and information science

In computer and information science, as in engineering, there was little earnings difference between bachelor’s and master’s degree holders, and little occupational change between them. Women with a master’s degree in computer and information science earned approximately the same as those with a bachelor’s degree, while men earned 6% more with a master’s degree than a bachelor’s degree. In terms of occupation, 54% of bachelor’s degree holders and 48% of master’s degree holders in computer and information science worked as computer and information systems professionals.

However, doctorate holders in computer and information science earned more than master’s degree holders, by 13% for women and 14% for men. This was mainly because 34% of doctorate holders in computer and information science worked as university professors and typically earned $130,000, while master’s degree holders who worked as computer and information systems professionals typically earned $90,300.

Master’s degree and doctorate holders in business and related fields had higher earnings than doctorate holders in most other fields

Charts 4a and 4b provide a visual representation of the earnings of full-year, full-time employees in each field of study by sex and by level of education. For both men and women, the highest-earning master’s degrees were in the fields of business and related studies, law, and pharmacy and related programs. However, while law and pharmacy and related programs were also the highest-earning fields at the bachelor’s degree level, business and related studies had earnings closer to the middle at the bachelor’s level.

Master’s degree holders in business and related studies not only had higher earnings than most other master’s degree holders, they also had higher earnings than doctorate holders in many fields of study. Men with a master’s degree in business and related studies had higher earnings than men with a doctorate in any other field of study besides law. Women with a master’s degree in business and related studies had higher earnings than women with a doctorate in sciences,^Note social and behavioural sciences, humanities, or education and teaching. Other studies also have found that business-related fields were among the highest-earning fields for both men and women.^Note

Graduates of business and related studies also had among the highest earnings at the doctoral level. Men with a doctorate in business and related studies earned $142,100, more than those with any other degree. Women with a doctorate in business and related studies earned $127,700, comparable to women with a doctorate in law and more than women with a doctorate in any other field of study. Approximately two-thirds (67%) of people with a doctorate in business and related studies worked as university professors and lecturers.

That said, master’s degree holders in business and related studies were more likely than doctorate holders in the same field to be among the highest-earning Canadians. About 1 in 7 (15%) people with a master’s degree in business and related studies were in the top 1% of Canadians in terms of earnings, compared with 8% for those with a doctorate in the field. This was primarily due to the high proportion of master’s degree holders in business and related studies who worked in senior management occupations: 11%, compared with 2% of their counterparts with a doctorate, and 3% of those with a graduate degree in other fields of study.

Conclusion

The earnings advantage associated with pursuing a master’s degree or a doctorate is different for each field of study. Generally speaking, in BHASE fields (such as business and related studies), workers who have a master’s degree earn significantly more than those with a bachelor’s degree, likely because those with a master’s degree are more likely to work in occupations that are more closely aligned with their field of study. However, not all BHASE fields of study followed this trend. In law, bachelor’s and master’s degree holders had similar occupational profiles, and therefore the earnings advantage of having a master’s degree was comparatively smaller. In pharmacy and related programs, those with a master’s degree had a relatively large earnings advantage over those with a bachelor’s degree, despite bachelor’s and master’s degree holders having similar occupations; in this case, the earnings difference was related to a difference in the location of work.

In most STEM programs, the earnings advantage associated with a master’s degree is comparatively smaller. In all STEM fields, the earnings advantage of having a master’s degree over a bachelor’s degree was less than 10%. This is because graduate degree holders in STEM fields, such as engineering, have occupations similar to those of bachelor degree holders.

In STEM fields, having a doctorate seems to have more of an impact on men’s earnings, while in BHASE fields, the earnings advantage of having a doctorate over a master’s degree seems more pronounced for women. Given that many doctorate holders work as university professors and lecturers—particularly in BHASE fields—it is possible that these changes are attributable to gender differences in the occupational profile of doctorate holders. More research is needed to understand these differences.

In general, the results outlined above indicate that, in most fields of study, the earnings differences between graduate degree holders and bachelor’s degree holders are related to the fact that graduate degree holders are able to obtain work in higher-paying occupations than bachelor’s degree holders.

One avenue for further analysis is a more systematic examination of the relationship between earnings differences and occupation for graduate degree holders. There are numerous possible relationships: graduate degrees may result in higher earnings by increasing the ability of graduates to find work in occupations relevant to their field of study; by increasing their ability to obtain management positions; or by enabling them to be more productive while working in the same occupations as bachelor’s degree holders. In addition, individuals who complete graduate programs may also have higher levels of skills, abilities, and attributes (such as motivation or ambition) than bachelor’s degree holders, which may contribute to higher earnings.

Katherine Wall, John Zhao and Sarah-Jane Ferguson are with the Census, Analysis and Special Projects Section in the Tourism and Centre for Education Statistics Division at Statistics Canada. At the time of the study, Carlos Rodriguez was a research economist in the same division.

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