Do UK Higher Education Students Overestimate Their Starting Salary?*

Abstract

The wage expectations of university students have relevance for human capital theory, models of student enrolment, and public policy on the provision of higher education. However, these expectations have been the subject of relatively little research in European countries, with no contemporary evidence available in the UK. There has also been little consideration in the literature thus far of how much estimates may be biased by non‐response and sample selection. This paper thus makes an original contribution to the literature by comparing UK undergraduate students' wage expectations with the actual wages earned by the same cohort on graduation, after attempting to correct for the aforementioned statistical issues in terms of observable characteristics. In contrast to other European studies, I conclude that, on average, full‐time students overestimate their starting salary. Yet I also find substantial variation in the extent of overestimation between different subgroups.

No point worrying? Potential undergraduates, study-related debt, and the financial allure of higher education

“…To some extent these sentiments have circulated since 1998, when tuition fees became an important aspect of English higher education funding policies (Lunt 2008). Consequently, a field of research has emerged to investigate the extent to which this shift towards cost sharing is indeed influencing the decision whether or not to apply to higher education (see Adnett and Slack 2007;Bachan 2013;Callender and Jackson 2008;Jerrim 2011;Walker and Zhu 2011). However, given the recent nature of the 2012 tuition fee increase and the magnitude of the changes, there is currently a lack of research examining its impact on prospective…”

How Much Will I Earn? Expectations Versus Reality

“…Some authors though suggest that the expectations on the part of students are overevaluated by approximately 15% (Jerrim, 2011). The results of research Graduate Barometre state that Czech students expect the salary of about 30,000 CZK, i.e.…”

“…In addition to this, some personal characteristics of an individual may also play an important role. More ambitious students have higher aspirations, aim at higher working positions and value their mathematical abilities, and have higher salary expectations than those who fear their failure to fi nd a job (Khosrozadeh et al, 2013).…”

“…It may be related to an inaccurate estimate of the employment position, for which they will be accepted. (Jerrim, 2011) The absence of empirical studies in the area of expected incomes is also pointed out by Brunello. He carried out the fi rst major supranational research regarding salary expectations in European tertiary schools among students of business and management.…”

“…The above stated facts prove that the issue of expected salaries on the part of students is important not only for the development of human capital and public policies (Jerrim, 2011), but also with regard to real demand on the part of future employers, which is refl ected by commercial consulting companies, such as Deloitte or the German company Trendence.…”