A Post-Secondary Education Remains the Key Pathway to Higher Incomes

  • March 11, 2015

By Jock Finlayson

Today’s job market can look confusing to young people contemplating their options for education and training after high school. Some politicians and business leaders voice alarm about “skill shortages,” yet youth unemployment rates remain high and many young adults with jobs (and some with university degrees) feel they are “over-educated” for their current positions. Once red-hot industry sectors like mining and oil and gas can suffer sudden and wrenching downturns, while others – like high technology, healthcare, transportation and financial services – quietly go about adding new jobs year after year.

Against this backdrop, plenty of young people (and their parents) may wonder whether taking years out of the workforce to pursue a post-secondary education still makes sense. For most, the answer is “yes.” The career options open to those with no post-high school qualifications at all are increasingly limited. And this is not just true of Canada – it applies broadly across the advanced industrial economies.

A recent analysis from the Organization for Economic Cooperation and Development (OECD) sheds useful light on the relationship between “tertiary” educational qualifications and employment opportunities and incomes.[1] The study looked at the relative earnings for workers with different levels of educational attainment across a mix of OECD member countries. Among the findings:

  • Adults with a “tertiary” education – a degree, college diploma, a skilled trade, or other type of post-secondary qualification – earned roughly 1.6 times more than their peers with no education beyond upper secondary school.
  • Higher educational attainment and improved literacy skills translate into greater earnings on the job.
  • In most countries, the rising supply of better-educated people has been matched by the growth of high-paying jobs that demand post-secondary credentials.

The above points relate to the 30 or so OECD member countries as a group. The specific patterns vary across individual economies. As it turns out, Canada stands out as country where the earnings advantage from completing a tertiary education is relatively modest compared to some other jurisdictions. The earnings premium for Canadians with a tertiary education averages roughly 1.4, below the 1.6 recorded for the OECD as a whole. In large part this reflects the massive increase in the proportion of our working-age population that has acquired a post-secondary credential over the past 25-35 years. Even so, most Canadians with PSE qualifications enjoy higher incomes than their counterparts lacking such credentials. And the earnings gap between those with tertiary education and those without is expected to continue widening over time.