Income Advantage for University Graduates
- Newfoundland and Labrador and New Brunswick lead all provinces on the income advantage for university graduates, with bachelor’s degree holders earning close to twice as much as high-school graduates.
- In all provinces, women benefit more than men—in terms of relative income—from getting a university degree.
- The income advantage for university graduates has varied by province over the past 15 years.
Putting the provinces’ performance on the income advantage of a university education in context
Investing in education has its benefits. In most countries, individuals who graduate from college or university (tertiary education) tend to benefit from better labour market prospects, reduced risk of unemployment, and higher earnings over the course of their working lives.1 While individuals clearly benefit from investing in a university education, they are not alone. Economies that invest in the education and skills development of their populations—through post-secondary education systems and other avenues—also stand to benefit in terms of higher tax revenues and fewer social transfer costs. Building an educated workforce also contributes to a more innovative and competitive economy.
How is the income advantage of a university education calculated?
The incomes of individuals with a university education (i.e., bachelor’s degree) were compared with the incomes of individuals with a high-school education. Income is calculated using salaries and wages. The median income (the point at which 50 per cent of respondents are below and 50 per cent are above) was selected because it is less susceptible to outliers, unlike average income, which can be skewed by a relatively few individuals with very high incomes. The results are shown as the dollars earned by a university graduate for every $100 earned by a person who graduated only from high school. The province with the highest income advantage may have a lower income in absolute terms, but a relatively higher income for individuals based on their education level.
Which province had the largest income advantage of a university education?
University graduates in Newfoundland and Labrador and in Nova Scotia earned over $170 for every $100 earned by a high-school graduate in 2013, making both provinces “A” performers. The remaining Atlantic provinces rank third and fourth, earning them a “B” and a “C” on this indicator. British Columbia has the lowest income advantage, at $132 earned by a university graduate for every $100 a high-school graduate earns.
The relative value of the income advantage to education may have less to do with the earning premiums for university graduates and more to do with the incomes of high-school graduates. The Atlantic provinces have the lowest median incomes for high-school graduates.
While the incomes of high-school graduates are clearly part of the story, they do not provide the complete explanation for the differential earning premiums of a university education. Another potential explanation for the variation in the income advantage of a university education may have to do with the strength of local economies. Alberta and Newfoundland and Labrador—the two top-ranked provinces in the Economy report card—had the highest absolute incomes for university graduates.
Scarcity may also play a role, as Newfoundland and Labrador, New Brunswick, and Saskatchewan—the three provinces with the lowest levels of university attainment—have higher incomes than every province except Alberta.
Does the income advantage of a university education vary by gender?
In all provinces, women benefit more than men by getting a university degree, in terms of the relatively larger income compared with a high-school graduate of the same gender. Newfoundland and Labrador and New Brunswick are still the leaders in terms of the income advantage for a university education for both genders, while Saskatchewan has the lowest income advantage for men and British Columbia has the lowest income advantage for women.
Although the income advantage of graduating from university is higher for women, actual income levels are significantly higher for men in all provinces, except Prince Edward Island. Women’s much lower incomes for high-school graduates are largely responsible for their increased advantage for a university education.
There are many reasons for the persistent gender gap—some are individual, others societal. They include the choices individuals make around major fields of study (for example, arts and humanities or business, math, or engineering), what programs are offered at colleges and universities, occupational choices, wage differences across major fields of study and occupations, labour force status, equity issues, and even broader social and economic policies. However, as the data show for men and women, an investment in education is a worthwhile endeavor with significant returns.
Does the income advantage for a university education vary by occupation?
The difference in the annual income of university-educated individuals working in natural and applied sciences versus education, law, and social, community, and government services is not large. On average, individuals working in science earned $4,752 more—ranging from $11,673 more in Alberta to $1,566 less in Prince Edward Island. Compared with “all occupations,” individuals working in natural and applied science occupations earned an average of $6,231 more, while those in education, law, and social, community, and government services earned $1,479 more.
While these results do not provide information on the actual field of study, they can serve as a proxy since a science education is a usually a prerequisite to work in a scientific occupation. Relative to college graduates, field of study at university may have less of a bearing on graduates’ median income—at least for the fields of occupation identified here. Further research is needed to determine whether there are gaps in starting salaries for graduates based on field of study and if or when those gaps close as the data here would suggest.
Has the income advantage of a university education changed over time?
There is some debate about whether the income advantage of post-secondary education is diminishing. One school of thought, with some support, is that given the increasing numbers of individuals obtaining a post-secondary education, the relative value is not what it used to be.2 Still, the overall income advantage for full-time employed individuals with a university education has remained relatively stable for Canada as a whole at least for the last 15 years. However, some provinces, particularly Newfoundland and Labrador, have seen more variability.3
Use the pull-down menu to compare the provinces’ income advantage.