The link between school quality and early career labour market outcomes. New evidence from England.

Abstract

Research has looked at the impact of education on life outcomes, including earnings. However, there has been little research in England using recent data looking at the association with school quality. Specifically, there is a lack of large-scale research to date investigating the link between school quality and labour market outcomes in England. This paper therefore aims to fill this gap in the field, looking at the association between school quality and (a) earnings and (b) the likelihood of receiving out-of-work (OOW) benefits. This research utilised an administrative dataset (the Longitudinal Educational Outcomes – LEO - dataset, provided by the Office for National Statistics), which links the National Pupil Database (NPD) with other data sources from, for instance, His Majesty’s Revenue and Customs (HMRC). Combining the LEO data with Ofsted judgements made it possible to conduct an England-wide study looking at school quality alongside pupil and school level characteristics and how these relate to earnings and the likelihood of claiming OOW benefits later in life. The first year that all schools had been inspected according to the four point Ofsted inspection grade scale was 2009/10, and so our first cohort were followed from the end of key stage 4 (age 15/16) in 2009/10 when they were aged 24/25. However, as primary schools will also contribute towards outcomes, our second cohort followed children from their school’s Ofsted grade at the end of key stage 2 (age 10/11) in 2009/10 up to age 19/20 (the most recent point with data available). We looked at earnings and OOW benefit receipt in the first cohort, but only OOW benefit receipt analysis was possible for the second cohort, as very early career earnings may not be an accurate estimate of future earnings. Our findings for the first cohort show there was a modest association between Ofsted judgements and earnings at age 24/25; the only significant comparison was that attending a school rated as good by Ofsted attracted a 2% earnings premium compared to attending a school judged as requires improvement. A stronger relationship was found between Ofsted judgements and the probability of receiving OOW benefits. For example, a pupil attending an outstanding school during key stage 4 had a 17% chance of experiencing a period of claiming OOW benefits during at least six months from age 15/16 to age 24/25, increasing to 23% for a pupil attending an inadequate school. A similar pattern was observed for the second cohort, whereby the probability of claiming OOW benefits increased across combinations of end of key stage 2 and end of key stage 4 Ofsted grades.While these findings are interesting and the study is the first of this scale in England, there are several limitations to keep in mind when interpreting the results. First , we were only able to look at the first cohort at age 24/25, and the literature suggests many people do not reach their full earnings potential until at least a decade later. With time, we will be able to learn much more from this dataset. It is also important to note that the definition of education quality embodied in inspection is not exclusively aimed at the labour market value of education. Moreover, school inspection is periodic, and tells us about schools at a very specific point in time. It is likely that important aspects about schools vary between inspections, particularly given that they occur relatively infrequently. Furthermore, we were unable to control for factors such as parental background characteristics (such as highest qualification achieved, parental employment, household structure and household income). It would also be desirable in future to follow the cohort from birth, throughout their entire educational journey, including the quality of their early years provision through to their post-secondary destination. The findings of this research are caveated but hopefully lay a solid foundation for further exploration into the journey through education.