Growing grads no big cause of pay drop

People graduating with an UG degree in 2013 earned an average 3.5 per cent less in real wages in the next five years, compared to 2009 grads – but Demand Driven Funding did not do it

The finding is in a new Treasury paper by Patrick Hartigan and Jonathan Hambur who investigated the relationship between driven funding of UG places and pay.

They report:

* in the first year a fifth of the lower earnings for 2013 grads was “due to the changing characteristics of graduates” with labour supply and demand the driver. In subsequent years characteristics did not drive a fall in real wages

* increased supply of graduates  “may” have lowered wages , due to difficulties in their matching roles to skills and interests however this “dissipates” over time as graduates get “better-suited” jobs

* however, overall decline in grad wages “was associated with the broader weakness in labour demand”

Despite this the authors conclude, policy interventions, “that go beyond supporting informed student choices are well targeted towards sectors with growing demand for skills.”

What like the previous government’s Job Ready Graduates model?

Maybe, maybe not.  As the Productivity Commission put it last week, “students appear to make good choices of their own volition. They have the best information about their own abilities and interests, making them well disposed to make decisions about what they will enjoy – and benefit from – studying,” (CMM October 5).