EPPE Network Associate Fellow Dr. Kristinn Hermannsson’s seminar on 'Social Origin Wage Gaps and Educational Routes' sheds light on how class and gender shape income in the UK. Find out more in this week's post.
Dr. Hermannsson opened last week’s talk by defining social origin wage gaps. For the uninitiated, this describes the difference in income between people with similar observable characteristics (education, gender, ethnicity, age) but belonging to different social classes.
The existence of social origin wage gaps has been well observed, with recent analysis from the US, UK and Scandinavia indicating a “class ceiling”, similar to that for gender. Evidence suggests that earnings are affected by social class, irrespective of education and other controls.
Using new data on social origin collected as part of the Labour Force Survey, Dr. Hermannsson is currently investigating this phenomenon in the UK, building on previous studies that make use of several different UK datasets to identify social origin wage gaps. Dr. Hermannsson’s work extends beyond the typical focus on those with graduate qualifications to incorporate all qualifications within the UK labour market. In order to synthesise data from across the UK, spanning 4 separate education systems and incorporating more than 80 qualifications, a framework of academic and vocational qualifications was used, each with 5 levels aligned to UNESCO’s International Standard Classification of Education (ISCED)
Dr. Hermannsson’s analysis reveals that wide variation in the severity of wage penalties is currently hidden within average measures of social origin wage gaps. When dissected more carefully, data shows that for those in the lowest socio-economic group (SEC8), wage penalties according to social class are minimal if individuals possess a graduate-level qualification, whether academic or vocational. The same is true for those with lower secondary vocational qualifications. However, those with all other academic qualifications face a 14%-20% wage penalty, while those with mid-range vocational qualifications earn 11%-14% less.
Particularly striking is an apparent gender difference in the impact of social origin wage gaps. Women from lower social classes (particularly those under 40) face significantly greater wage penalties than their male counterparts, while differences between genders in the highest social classes are negligible by comparison (see figures 2 and 3). This highlights the importance of an intersectional perspective on social disadvantage which is capable of capturing the complex interactions between class, gender, ethnicity etc.
Within this analysis, the introduction of controls for sector of employment, firm size, location of workplace and region/country of birth suggest that part of the wage increases associated with education are driven by sorting effects into sectors and large firms. Conversely, social origin wage penalties appear to be exacerbated by location and geographic origin. Nonetheless, the impact of social class remains significant.
Future research will need to further explore whether these effects are driven by selection or the varying effectiveness of different educational routes. In either case, the implications are significant. If understood as a causal relationship, it appears that some educational routes are significantly more effective at minimising the impact of socio-economic disadvantage, and by steering young people towards particular educational paths they may be less likely to experience a social origin wage penalty. If explained by selection effects, then the argument that education can act as a key driver of social mobility is undermined, and society must look more closely at the provision of public services in order to mitigate wage inequalities.
Thank you very much to Dr. Hermannsson for taking the time to share his findings with the EPPE Network and others. If you have further questions, you can get in touch via his individual profile or on Twitter.