Post-secondary Education Pays High Returns for University, College and Trade School Graduates: C.D. Howe Institute

Toronto, Aug. 24 – Higher education pays high rates of return to most
graduates of universities, colleges and trade schools, according to a
C.D. Howe Institute study released today. In “The Payoff: Returns to
University, College and Trades Education in Canada, 1980 to 2005,”
authors Daniel Boothby and Torben Drewes, using data from the long-form
census for the years 1981 through 2006, consider the financial returns
for different types of postsecondary education, and weigh the policy
implications for government funding of students and institutions.

Among OECD countries, they note, Canada has the highest percentage of
postsecondary graduates in the population 25-64 years old, which is due
to having a large number of non-university postsecondary graduates from
colleges and trade schools. Boothby and Drewes ask the question,
however, whether Canada has produced too many postsecondary graduates in
general, or too many graduates from colleges or trade schools in
particular. Based on their findings, they conclude “no” to both
questions.

Among their findings:

1. Female university graduates who worked full-time and full year earned
more on average (e.g., 60 percent more in 2005) than female high-school
graduates.

2. For women and men, the earnings premium – how much more money, on
average, that postsecondary graduates earn compared to high-school
graduates – for a bachelor’s degree is higher than the premium from a
community college diploma, which is higher than the premium to a trade
education.

3. The earnings premium for a bachelor’s degree is higher for women than
for men. However, there is little difference between male and female
earnings premia for community college diplomas.

4. In 2005, men with a trades certificate earned 12 percent more on
average than male high-school graduates. But female trades graduates, on
average, saw no significant earnings difference.

5. The earnings premium for both women and men with a bachelor’s degree
rose fairly steadily from 1980 to 2005, though the rate of increase
slowed somewhat after 1990.

6. For female community college graduates, the earnings premium rose
from 1980 to 1990; male community college graduates followed a similar
pattern.

“These findings are not only of interest to aspiring students and their
parents,” noted Torben Drewes, a Professor of Economics at Trent
University, “they can be instructive about the efficient allocation of
scarce government funds.”

For the study click here: http://www.cdhowe.org/pdf/ebrief_104.pdf

For more information contact:

Torben Drewes
Professor of Economics, Trent University

or

Colin Busby
Policy Analyst

C.D. Howe Institute
416-865-1904