4.5 Summary of influences
Capital per worker:
New Zealand is significantly behind Australia and the OECD average in capital per worker. The capital stock also appears to have strong links to skill-biased technological change, so affects returns to tertiary education.
Mix of Type A/Type B qualifications:
New Zealand's mix of degrees is very different from the OECD average, and returns to the two types significantly affect aggregate earnings.
High proportion of immigrants:
New Zealand has a high proportion of immigrants in the workforce and in education. Immigrant status does make an appreciable difference to earnings.
Taxation:
New Zealand has recently changed its tax rates in a fashion that has had a significant effect upon tertiary returns.
Employment:
New Zealand has had higher employment rates than the OECD average for both secondary and tertiary graduates. A relatively higher employment rate for secondary graduates has resulted in lower tertiary returns calculations for New Zealand.
Supply of graduates:
There is some evidence that a higher supply of graduates reduces wages to skilled workers, and New Zealand has a high supply of Type B graduates.
Industries and subjects chosen:
One of the clear findings internationally is that the subject of study and the industry of employment affect earnings significantly; New Zealand is no different.
Mismatch in field and/or qualification level:
Mismatch between field of study and sector of employment has some measured effect on earnings, as does over- and under-qualification; however, it is difficult to determine how much of the difference is due to measurement error, and how to interpret the results.
Innovation:
Innovation increases the premium to skilled workers. New Zealand has not invested in research at the same rate as other countries, which could affect the level of innovation and, thus, the returns to tertiary education.
Firm size:
New Zealand has a lower proportion of large firms compared to the OECD, and larger firms tend to pay a higher premium to education.
