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Income outcomes of tertiary pathways
Introduction

School leavers often look to university as a requirement for a well paying job. But does this stack up? We compare the income trajectories of different tertiary pathways and find that apprenticeships in many respects come out top.

Our research takes 19 year old kiwis and matches them to tertiary training pathways based upon enrollments at age 19 and qualifications obtained by age 25. We link individuals through to their IRD tax records and calculate median incomes.

We separate apprentices from trades related Industry Training Organistations (ITOs) from other ITOs. Trades ITO's include BCITO, Competenz, Skills Org, Connexis and MITO. Male trades apprentices had highest income rates until their late twenties when university graduates caught up. By the time university graduates apprentices from 2003 had earned $135,000 more than their graduate counterparts. Even though university graduates income continues to grow significantly into their thirties by age 34 apprentices are still $80,000 ahead in terms of cumulative income.

Looking at more recent cohorts apprentices income has grown significantly in their mid to late twenties, while university graduates income trajectory has remained much the same. This has meant that apprentices who turned 19 in 2009 are now earning more $6,000 than university graduates and the lifetime earning gap has grown to $185,000.

This gap in earnings is without considering student loans which average $30,000 for the 2009 university graduates.

Yearly income

The below dashboard presents the yearly median income of persons down the different study pathways.

While studying university graduates had low income, even when including student allowances. However as they transition from study into the workforce they surpass other pathways in yearly income in their late twenties.

When looking at more recent cohorts the income trajectory of trade apprentices has improved, however it has remained much the same for university graduates. While graduates form 2003 have caught up to trades apprentices in income by age 28, the 2009 cohort of trades apprentices are still earning $6,000 more than university graduates at age 28.

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Methodology

To conduct this analysis we took populations of 19 year old New Zealand residents and gathered all training enrollments at age 19 from Ministry of Education records. From these enrollments we link qualification completions by age 25 and categorize students based on the highest level qualification obtained.

From this population we link through to IRD tax records and calculate median incomes of only those who have active records in a year. Meaning, if a person had moved overseas and had no income in that year they would be excluded from the calculation of the median.

We include income from wages and salaries, business income sources and wages and salaries. Beneficiary income, and rental incomes are excluded.

Income is adjusted relative to the CPI.

Cumulative income

While university graduates income surpasses trades apprentices in their late twenties in terms of lifetime income trades apprentices are still $80,000 ahead at age 34.

The gap between trades apprentices and university grades at age 28 has grown from $136,000 from the 2003 cohort to $185,000 from the 2009 cohort. That's more than enough for a home deposit!

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Methodology

To conduct this analysis we took populations of 19 year old New Zealand residents and gathered all training enrollments at age 19 from Ministry of Education records. From these enrollments we link qualification completions by age 25 and categorize students based on the highest level qualification obtained.

From this population we link through to IRD tax records and calculate median incomes of only those who have active records in a year. Meaning, if a person had moved overseas and had no income in that year they would be excluded from the calculation of the median.

We include income from wages and salaries, business income sources and wages and salaries. Beneficiary income, and rental incomes are excluded.

Income is adjusted relative to the CPI. Income is cumulatively summed as all income earned at and after the age of 19.

The cost of tertiary study

Income alone does not tell the complete story of wealth differential. To pay course fees and living costs many students take out student loans. We present the average student loan accumulated by each study path in the dashboard below.

Apprenticeships are not presented as in many sectors fees are covered by employers, but for reference "Most BCITO trade qualifications cost $2,000-$4,000 in total."

Methodology

This analysis builds upon the income outcomes analysis where we take 19 year olds each year between 2003 and 2013. From these persons we classify them down tertiary pathways based on enrollments at age 19 and completions by the age 25.

Within these populations we determine the average student loans accumulated of those students who have student loan records.

Conclusion

Trade apprentices have earned a home deposit before university graduates income surpasses their own. Trades apprentices turning 19 in 2003 have earned $135,000 over graduates by age 28. This has improved over time for apprentices with the gap growing to $185,000 at the same age for the 2009 cohort.

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Women in trades over time

Track the number and proportion of women in trade sectors over time