Large Differences in Income and Employment of University Dropouts

A high number of university students also leads to an increased number of dropouts. The income of persons in Europe who dropped out of university is on average eight per cent higher than that of employees who have never been enrolled in higher education; at the same time, it is 25 per cent lower than the income of people who left university with a degree. The latter also have significantly better employment opportunities than dropouts. This is the result of a study conducted by Dr. Francesco Berlingieri and Theresa Bolz from the Research Department “Labour Markets and Human Resources” at ZEW Mannheim. Using data from 18 European countries, the researchers have examined the income and employment situation of people who dropped out of higher education. In some cases, the study has revealed some considerable differences between the various countries.

“In Ireland, Great Britain, the Netherlands, Slovenia, Slovakia and Poland, there are income differences of more than ten per cent. In these countries, dropouts earn significantly more than employees with an intermediate level of education,” says Bolz. For most of the countries considered, however, no evidence of such wage differences have been found. In Europe, dropouts rarely earn more than employees who have completed vocational training or obtained a comparable school-leaving qualification. A cross-country comparison reveals further differences: while people with a university degree in Denmark earn about ten per cent more than dropouts, the figure is around 35 per cent in Cyprus, Germany and Poland. “These large disparities between individual countries are likely to result from differences in labour market flexibility and the number of university graduates. In a country that has stricter employment protection laws and many university graduates, dropouts do not earn more than workers with vocational training or a comparable school-leaving qualification,” says Berlingieri.

According to the ZEW study, the employees’ gender and the sector in which they work also have an influence on income. “The income gap between university graduates and dropouts is greater for female employees than for male ones. This is likely due to the higher share of part-time employment among women,” says Berlingieri. Moreover, dropouts are better paid in the private sector than in the public sector. This could be related to the fact that formal degrees are more important in the public sector, explains the ZEW researcher.