Economic Insights

Earnings of Postsecondary Graduates by Detailed Field of Study Economic Insights

Earnings of Postsecondary Graduates by Detailed Field of Study

by Marc Frenette and Kristyn Frank

Social Analysis and Modelling Division

Release date: March 11, 2016 Correction date: (if required) More information PDF version

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This Economic Insights article documents age-adjusted mean earnings by detailed field of study among 25- to 54-year-old university and college graduates who worked full year, full time in 2010. The data are drawn from the 2011 National Household Survey. The results suggest that management sciences and quantitative methods graduates were the top earners among male and female bachelor’s degree holders in 2010. The study also finds that earnings vary considerably among graduates from specific fields of study that are typically grouped together (e.g. economics graduates earn more than graduates from other social science programs, such as sociology and psychology).

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Introduction

Perhaps the most important decision that postsecondary students make is what to study since the choice is closely linked to future job satisfaction and earnings. Evidence suggests that students take both factors into consideration. Indeed, while field of study choice is largely determined by students’ individual preferences (Arcidiacono 2004), the expected earnings associated with a field is also an important consideration for most students (Gunderson and Krashinsky 2009). For this reason, producing quality evidence on the association between field of study and earnings has the potential to provide students with data that enable them to become better informed in their decision making.

Much of the existing literature provides earnings information for Canadian graduates by broad field of study, generally concluding that graduates of more applied fields, such as engineering, receive higher earnings than graduates of liberal arts fields (e.g., Finnie 2001; Finnie and Frenette 2003; Frank, Frenette and Morissette 2015; Frank and Walters 2012; Ostrovsky and Frenette 2014; Walters 2004).

While results by broad field of study may be highly useful to policymakers and education planners, students are typically required to decide among very specific programs. Earnings by detailed fields can provide students with information that may facilitate these decisions. Results can also provide insight into the potential earnings advantages of additional education within specific fields. Findings from the 1996 Census indicate notable earnings differentials within specific fields by different levels of education (Stark 2007); however, more recent data are needed.

This study uses the 2011 National Household Survey to compare mean (or average) annual earnings by detailed field of study for bachelor’s and master’s degree graduates, as well as college graduates (see Data sources, methodology and definitions). Earnings across fields are presented separately for 25- to 54-year-old men and women who worked full year (49 to 52 weeks), full time (at least 30 hours per week) in 2010. Given the wide age range (necessary to produce adequate sample sizes), the results are age-adjusted. The fields of study are reported at the four-digit level of the 2011 Classification of Instructional Programs (CIP). This level of detail allows for useful comparisons within broad fields of study. For example, students interested in postsecondary programs in architecture and engineering may not only examine whether earnings differences exist between architecture and engineering graduates, but also between graduates of different types of engineering programs (e.g., civil, electrical and electronics, and mechanical). Note that results are only reported for fields with a sample size of 200 or more.Note 1

Note that results are only age-adjusted within sex and education level groupings. For this reason, the analysis in this study focuses exclusively on comparisons across field of study for individuals of the same sex and with the same highest level of completed education. Comparisons between men and women would be particularly challenging since the data do not contain many of the key factors that have been associated with analyzing the gender wage gap, such as accumulated work experience, job tenure, unionization, working in a self-directed work group, work schedules and flexible work hours, overtime pay, firm size, working for a non-profit organization, foreign ownership, performance-based pay, and receipt of workplace training (see Drolet, 2002).

Management sciences and quantitative methods graduates highest earners among bachelor’s degree holders

On average, 25- to 54-year-old male bachelor’s degree graduates who worked full year, full time, in 2010, earned $87,543 in 2010 dollars (Chart 1).Note 2 Among them, management sciences and quantitative methods graduates earned the most—$130,547, or $43,004 more than the average male bachelor’s degree graduate (after adjusting for age).Note 3 These graduates were followed closely by graduates of chemical engineering ($120,148), geological and earth sciences/geosciences ($119,397), and finance and financial management services ($116,473).Note 4 Of the 13 programs with above-average earnings,Note 5 6 were in engineering and 4 were in business. Note that 2010 was in the midst of a recovery in natural resources prices, which may have benefited graduates from certain disciplines such as engineering and geology. More recently, world oil prices have declined (Gellatly 2015), and it remains to be seen how graduates in related fields have fared in the labour market.

At the other end of the spectrum, male bachelor’s degree graduates from theological and ministerial studies earned the least ($51,791) after adjusting for age.Note 6 These graduates were followed closely by graduates from music ($55,942); social work ($56,407); and linguistics, comparative and related language studies and services ($58,301).

A key finding that emerges is that earnings varied considerably by specific fields, even within broad field groupings. For example, the primary 2011 CIP groupings combine architecture and engineering programs. However, while male graduates from all engineering programs but one earned more than the average male bachelor’s degree graduate,Note 7 the average earnings of male architecture graduates was almost $9,000 below the overall average (after adjusting for age). Similarly, within the category of social and behavioural science and law,Note 8 economics was the only field in which men had above-average earnings ($93,256)—although male political science and government graduates were close to the average ($85,069). In contrast, male general psychology graduates earned $68,905 on average ($24,352 less than their counterparts in economics), and male sociology graduates earned $73,934 on average ($19,322 less than their economics counterparts). Similar findings hold for other broad field of study groupings—that is, the average earnings of graduates varied considerably across specific disciplines within the broader classification. This finding holds more generally by sex and education level.

The relative results for women with a bachelor’s degree bear striking similarities to the results for men. In Chart 2, the field associated with the highest age-adjusted earnings was management sciences and quantitative methods graduates ($94,525, which was about $30,000 above the average across all disciplines—$64,420).Note 9 This was followed closely by chemical engineering ($94,385), mechanical engineering ($86,549) and general engineering ($85,603). More generally, the fields associated with above-average pay for female bachelor’s degree holders overlapped substantially with those for their male counterparts. This included many fields that women are typically less likely to choose than men, including several types of engineering programs, mathematics, and even geological and earth sciences/geosciences (a field that men are much more likely to select than women). Economics was also associated with the highest pay among social and behavioural science and law graduates for women (as was the case for men). Of the 18 disciplines associated with above-average earnings, 6 were in business and 6 were in engineering.

The fields associated with the lowest average earnings for female bachelor’s degree graduates included French literature ($50,328), followed very closely by human development, family studies and related services ($50,607), general human services ($50,624), and special education and teaching ($50,927)Note 10. Although the specific fields appearing at the very bottom were not the same for men and women, there was considerable overlap in the fields associated with below-average pay for both sexes.

Indeed, there were some notable differences in the fields of study associated with above- or below-average pay for male and female bachelor’s degree holders. For example, male graduates of registered nursing, nursing administration, nursing research and clinical nursing programs earned $9,491 below the average for all male bachelor’s degree graduates. In contrast, their female counterparts earned $7,026 above the average for all female bachelor’s degree graduates. Similarly, male journalism graduates earned $14,326 below the average earnings of all male bachelor’s degree graduates, while their female counterparts registered earnings that were close to the average.

Earnings highest among finance and financial management services graduates at the master’s degree level

Turning to men with a master’s degree, finance and financial management services graduates earned the most on average (after adjusting for age). Male graduates from this discipline earned $160,100 on average (in 2010 dollars), which was almost $50,000 more than the average across all fields of study (Chart 3). Of the five disciplines associated with above-average earnings, four were business-related, and the fifth was in engineering.Note 11

The field associated with the lowest pay for male master’s degree holders included theological and ministerial studies ($50,184), and is followed by social work ($62,958), library science and administration ($66,456), and general psychology ($74,091).

One notable difference between the results for male bachelor’s and master’s degree holders relates to engineering graduates. At the bachelor’s degree level, graduates from six out of seven of the different types of engineering programs registered above-average earnings in 2010 (the seventh registered average earnings). Among male master’s degree holders, graduates from only one out of the six engineering programs with sufficient samples registered above-average earnings (general engineering).

Women who graduated with a master’s degree in finance and financial management services also earned the most at their level—$111,714 (Chart 4). They were followed closely by three other business-related disciplines: general business/commerce ($111,327), business administration, management and operations ($99,367), and accounting and related services ($99,060).

The fields associated with the lowest pay for women with a master’s degree included theological and ministerial studies ($49,415), followed by student counselling and personnel services ($59,944); linguistic, comparative and related language studies and services ($62,614); and teacher education and professional development, specific levels and methods ($65,342).

One interesting difference between men and women with a master’s degree relates to the public administration results. Male graduates from that discipline earned almost $17,000 less than the average male master’s degree graduate. In contrast, female public administration graduates earned more than $4,000 above the average female master’s degree graduate.

Less earnings variation across fields among college graduates

In general, there was far less earnings variation across specific fields of study among college graduates than among bachelor’s and master’s degree graduates.

More specifically, male college graduates from 61 of the 93 fields (66%) earned within $10,000 (in 2010 dollars) of the overall average after adjusting for age (Chart 5), compared with 23 of the 61 programs (38%) among male bachelor’s degree graduates (Chart 1) and 6 of the 30 programs (20%) among male master’s degree graduates (Chart 3). Similarly, female college graduates from 61 of the 75 fields (81%) earned within $10,000 of the overall average (Chart 6), compared with 46 of the 69 disciplines (67%) among female bachelor’s degree graduates (Chart 2) and 17 of the 34 programs (50%) among female master’s degree graduates (Chart 4).

That being said, the field associated with the highest average earnings among male college graduates was mining and petroleum technologies/technicians ($102,986), while the lowest was health aides/attendants/orderlies ($45,193).

Among female college graduates, average earnings ranged from $63,721 for criminology graduates to $36,158 for cosmetology and related personal grooming services.

Another notable difference between the college and university results is the fact that business graduates fared much better at the university level than at the college level. Indeed, university business graduates registered average earnings that were often near the top among all disciplines. In contrast, the average earnings of college business graduates were much closer to the overall college average.

Conclusion

The objective of this study has been to compare the age-adjusted earnings observed among full-time, full-year employees disaggregated by detailed fields of study. More specifically, specific fields of study were ranked according to age-adjusted earnings by sex and education level. Such information provides more useful information to students faced with making program choices than earnings data classified by broader categories.

One of the key findings that emerges from the study is the high degree of variability in earnings by specific field of study. For example, although engineering graduates are often grouped with architecture graduates, engineering graduates generally earn considerably more. Similarly, economics graduates typically earn far more than psychology graduates, yet both are often grouped together under social sciences.

The relative ranking for certain disciplines depended on the level of study. For example, engineering graduates were typically ranked above average at the bachelor’s degree level. However, at the master’s degree level, male engineering graduates generally registered below-average earnings. Similarly, university business graduates often ranked near the top of the earnings ladder, but at the college level, they were generally closer to the average.

The range of earnings associated with the fields was much smaller among college graduates than among their university counterparts. Male and female college graduates in most disciplines earned, on average, within $10,000 of the overall average.

Given the insights provided in this study, future analysis carried out by field of study may benefit from a similar level of detail whenever possible.

References

Andrews, F. M., J. N. Morgan, J. A. Sonquist, and L. Klem. 1967. Multiple Classification Analysis: A Report on a Computer Program for Multiple Regression Using Categorical Predictors. Ann Arbor: The Institute for Social Research.

Arcidiacono, P. 2004. “Ability sorting and the returns to college major.” Journal of Econometrics 121(1-2): 343–375.

Drolet, M. 2002. The “Who, What, When, and Where” of Gender Pay Differentials. The Evolving Workplace Series no. 4. Statistics Canada Catalogue no. 71-584-MIE. Ottawa: Statistics Canada and Human Resources Development Canada.

Finnie, R. 2001. “Fields of plenty, fields of lean: The early labour market outcomes of Canadian university graduates by discipline.” Canadian Journal of Higher Education 31 (1): 141–176.

Finnie, R., and M. Frenette. 2003. “Earnings differences by major field of study: Evidence from three cohorts of recent Canadian graduates.” Economics of Education Review 22 (2): 179–198.

Frank, K., and D. Walters. 2012. “Exploring the alignment between post-secondary education programs and earnings: An examination of 2005 Ontario graduates.” Canadian Journal of Higher Education 42 (3): 93–115.

Frank, K., M. Frenette, and R. Morissette. 2015. Labour Market Outcomes of Young Postsecondary Graduates, 2005 to 2012. Economic Insights, no. 50. Statistics Canada Catalogue no. 11-626-X. Ottawa: Statistics Canada.

Gellatly, G. 2015. Recent Developments in the Canadian Economy: Fall 2015. Economic Insights, no. 53. Statistics Canada Catalogue no. 11-626-X. Ottawa: Statistics Canada.

Gunderson, M., and H. Krashinsky. 2009. Do Education Decisions Respond to Returns by Field of Study? Canadian Labour Market and Skills Researcher Network. Working Paper no. 47.

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.

Stark, A. 2007. Which Fields Pay, Which Fields Don’t? An Examination of the Returns to University Education in Canada by Detailed Field of Study. Working Paper 2007-03. Ottawa: Department of Finance.

Statistics Canada. 2011. Classification of Instructional Programs (CIP) Canada. Statistics Canada Catalogue no. 12-590-X. Ottawa: Statistics Canada.

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

Data sources, methodology and definitions

Data sources

This study uses data from Statistics Canada’s 2011 National Household Survey (NHS). The sample includes men and women aged 25 to 54 whose highest level of postsecondary studies were completed in Canada. In addition, only those who had positive wages, no self-employment income, worked as paid employees, and had full-year, full-time employment (i.e., they worked 49 to 52 weeks, mainly 30 hours or more per week) are included.

Only graduates from fields with 200 or more observations in the sample are retained for analysis. The resulting sample sizes were largest for college graduates, with 138,102 women and 129,843 men; among bachelor’s degree holders, there were 105,129 women and 92,489 men. Sample sizes for master’s degree holders are similar for women (19,226) and men (19,996). Based on the sample criteria, very few fields would have been retained for doctoral and professional degree holders, therefore they are not included in this study.

Methodology

The results presented in this study are based on age-adjusted regression coefficients estimated by multiple classification analysis (MCA)—a technique that removes the arbitrariness associated with selecting a reference category for the fields of study (Andrews et al. 1967). The approach begins by running an ordinary least squares regression with one omitted category (as per usual). Each coefficient is then adjusted (including the one associated with the omitted category, which is set to zero) by subtracting from each of them the value of the linear combination of all of the coefficients associated with each category and their relative population share. The standard errors can then be estimated with a non-parametric bootstrapping approach. Although it is not strictly necessary, bootstrapping the standard errors accounts for the stratification inherent in the NHS. A total of 30 bootstrap iterations were applied in the study.

The resulting coefficients obtained from the MCA models are interpreted as a difference from the average earnings of individuals within a given group based on sex and education level. These coefficients were then used to calculate the average predicted earnings (in 2010 dollars) of graduates from each field of study, assuming they were all the same age (which was the average age for their sex and level).

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 LLB, JD and BCL programs, and legal research and advanced professional studies (post-LLB/JD) programs, as well as pharmacy, pharmaceutical sciences and administration programs were also excluded from the analysis as these are typically associated with professional degrees.

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: The field of study is based on the 2011 Classification of Instructional Programs (CIP) Canada codes, available for the highest certificate or degree in the 2011 National Household Survey. Fields are reported at the detailed subseries (four-digit) level (Statistics Canada 2011).

Master’s degree: A university degree at the graduate level, based on the highest certificate or degree.