The college wage premium in the UK: decline and fall?

Abstract

We exploit two longitudinal cohort studies for birth cohorts of 1970 and 1990 to assess the change in the UK college wage premium (CWP) for those aged 25–26 years. After controlling for a rich set of covariates, we find evidence of a decline in the average CWP from 18 per cent to 8 per cent. The extent of the fall is common to men and women; hence, it is not driven by changes in sex composition over this time period. Our results contrast with previous findings of relative stability in the CWP over time. In a complementary analysis, we exploit Labour Force Survey (LFS) data from 1995 to 2019 to explore the timing of the fall in the CWP and to assess whether the decline is specific to particular birth cohorts or age ranges of workers.