The value-added of the institution and the choice of subject studied play an important role in explaining earnings differences for young and adult learners in further education (FE) colleges. For example, the higher ranked a college is in terms of value-added, the higher the later life earnings of its students, especially for adult learners.
But choice of subject studied has bigger effects than choice of college. For example, engineering and information technology show earnings returns that are three to four times higher than moving from a lower ranked college to a top ranked college. Areas such as business and media studies also show high returns, about twice as large as moving from low to higher ranked colleges.
These are among the findings of research by Jenifer Ruiz-Valenzuela and colleagues, to be presented at the Royal Economic Society’s annual conference at the University of Warwick in April 2019. Their study also finds that:
- Colleges with higher value-added in earnings are also those showing higher value-added in moving students to higher levels of learning and progression to university.
- There is no correlation of FE college value-added measures with inspection ratings or student satisfaction surveys.
- Recent efforts by the Department for Education to provide linked earnings and education data are crucial for assessing the earnings and employment returns for FE colleges and difference in subject areas in further education.
The authors conclude:
‘More than four million publicly funded learners attend FE colleges every year, and these learners tend to be disproportionally from disadvantaged backgrounds and with low levels of prior attainment.’
‘A better understanding of what drives high value-added among FE colleges is particularly relevant if policy-makers want to advance social mobility and reduce inequality.’
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This study uses the new Longitudinal Educational Outcomes (LEO) dataset to provide the first assessment of the value-added of further education colleges in England, as well as earnings and employment returns to qualifications in different subject areas available at these colleges.
The authors provide an assessment of the returns to further education for young and adult learners attending FE colleges in England between 2007 and 2010. They study the employment outcomes and earnings returns for individuals attending colleges of varying quality, and compare those with the returns to specialising in different subject areas, measured between five and ten years after attending these institutions. They also explore the different mechanisms that contribute to making certain FE colleges more or less successful in improving student outcomes.
Institutions’ value-added plays an important role in explaining earnings differences between young and adult learners. The results indicate that younger learners (those aged 16 to 20 when entering FE colleges) who attended an institution at the 75th percentile of the value-added distribution (rank 150 out of 200 colleges) have about 3% higher earnings at age 24 to 27 compared with those who attended an institution at the 25th percentile (rank 50 out of 200 colleges).
The effect of attending a higher value-added college is about twice as large for adult learners (who attended FE colleges between the ages 25 and 59). Value-added estimates on employment probabilities are substantially smaller, suggesting very little variation between colleges.
FE colleges show substantially more variability in their ability to help learners to make progress to qualifications at level 3 (comparable to A-levels), and to enter university at a later point. Young learners who attend an institution ranked in the top 25% compared with those attending one at the bottom 25% of the value-added distribution are more than five percentage points more likely to have obtained a level 3 qualification, and about four percentage points more likely to have attended university by the age of 24 to 27.
These effects are substantial considering that only about 40% of the typical learners attending an FE college obtain level 3 qualifications, and fewer than 30% attend university by their mid-twenties.
Colleges that have higher value-added in earnings are also those that have higher value-added in moving students into university, suggesting that the ability to advance students on to higher education is an important mechanism explaining better outcomes in the labour market.
The results for young learners suggest substantial differences in the returns to different subject areas within vocational education among those who take the same type of qualification and at the same level of learning.
The subject areas that tend to increase earnings are engineering and information technology, showing returns that are about three to four times higher than moving from a lower ranked college to a top ranked college.
Areas such as business and media studies also show high returns, about twice as large as moving from low to higher ranked colleges. Courses in areas such as languages or education and training tend to show very small or no returns.
Finally, the value-added measures show no correlation with existing measures of institutional quality, such as inspection ratings or reported student satisfaction.
The typical student attending an FE college is relatively immobile compared with those attending higher education. Ensuring appropriate career advice about different subject areas becomes particularly relevant in this context.
Where Versus What – The Value Added of Further Education Colleges in England and Returns to Subject Areas by Esteban Aucejo (Arizona State University and CEP & CVER, LSE), Claudia Hupkau (CUNEF and CEP & CVER, LSE) and Jenifer Ruiz-Valenzuela (CEP & CVER, LSE)
