The Impact of Tertiary Study on the Labour Market Outcomes of Low-qualified School Leavers (WP 15/07)

Abstract

This study examines the impacts of post-school education on the labour market outcomes of young people who leave school with few qualifications. Specifically, it estimates the effects of tertiary study on the employment rates, benefit receipt rates and earnings of young people who left school without completing NCEA level 2, who enrolled at a tertiary institution while they were aged 16-19. The benefits of the further education are measured by comparing the students' post-study outcomes with those of matched comparison groups of other poorly qualified school leavers who did not undertake any tertiary education.

We find that enrolling in a level 1–3 or level 4 certificate programme had a small positive impact on the employment of low-qualified school leavers, raising their employment rate by 3.4 percentage points on average, two years after they ceased studying. However, the benefits of tertiary study were confined to the 44% of students who completed a qualification and were not experienced by non-completers. Students who completed a level 1-3 certificate were 8.5 percentage points more likely to be employed and 6.4 percentage points less likely to be receiving a benefit than their matched comparisons two years after finishing. Slightly larger benefits were experienced by those who completed a qualification at level 4 or higher. The size of the employment impacts associated with gaining a qualification varied by gender and ethnicity, the type of tertiary provider and the subject area of the qualification. There was no evidence that tertiary study had a significant impact on participants' level of earnings, after controlling for their employment status.

Acknowledgements

We would like to thank Michele Morris, Diana Cook, Zaneta Park, Tony Simmers and David Kidson for their very helpful comments on an earlier draft of this paper.

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Working Paper are strictly those of the author(s). They do not necessarily reflect the views of the New Zealand Treasury, Statistics New Zealand, or the New Zealand Government. The New Zealand Treasury, Statistics New Zealand, Ministry of Justice and the New Zealand Government take no responsibility for any errors or omissions in, or for the correctness of, the information contained in this Working Paper. The paper is presented not as policy but with a view to inform and stimulate wider debate.

The results in this report are not official statistics - they have been created for research purposes from the Integrated Data Infrastructure (IDI) managed by Statistics New Zealand. Ongoing work within Statistics New Zealand to develop the IDI means it will not be possible to exactly reproduce the data presented here.

Access to the anonymised data used in this study was provided by Statistics New Zealand in accordance with security and confidentiality provisions of the Statistics Act 1975. Only people authorised by the Statistics Act 1975 are allowed to see data about a particular person, household, business or organisation. The results in this report have been confidentialised to protect these groups from identification.

Careful consideration has been given to the privacy, security and confidentiality issues associated with using administrative and survey data in the IDI. Further detail can be found in the privacy impact assessment for the Integrated Data Infrastructure available from Statistics New Zealand.1

The results are based in part on tax data supplied by Inland Revenue to Statistics New Zealand under the Tax Administration Act 1994. These tax data must be used only for statistical purposes, and no individual information may be published or disclosed in any other form or provided to Inland Revenue for administrative or regulatory purposes.

Any person who has had access to the unit-record data has certified that they have been shown, have read and have understood section 81 of the Tax Administration Act 1994, which relates to secrecy. Any discussion of data limitations or weaknesses is in the context of using the IDI for statistical purposes and is not related to the data's ability to support Inland Revenue's core operational requirements.