Diverging Labour-Market Trajectories of Australian Graduates from Advantaged and Disadvantaged Social Backgrounds: A Longitudinal Analysis of Population-Wide Linked Administrative Data

Abstract

Despite mounting evidence that university participation enhances labour-market prospects, there are growing concerns about unequal returns to university for graduates from advantaged and disadvantaged social backgrounds. The available evidence-base, however, suffers from significant shortcomings that challenge the validity of these findings—including small sample sizes, cross-sectional designs, and self-reported measures of labour-market performance. In this study, we overcome these methodological limitations by leveraging large-scale linked administrative data covering the full population of individuals graduating from Australian universities over the 2005-2011 period (n=3,107,085 annual observations and 565,318 graduates). Capitalising on this unique and powerful dataset, we examine differences in the labour-market trajectories of graduates from multiple social backgrounds (based on socio-economic status, ethnicity, migration, location, and disability) over a 10-year observation window. We track both their employment earnings and the amount of unemployment benefits that they received. Our findings reveal higher returns to university education over the first 10 years post-graduation amongst graduates from advantaged social backgrounds compared to their peers from more disadvantaged social backgrounds. However, there was substantial heterogeneity in graduates’ earnings and unemployment-benefit receipt both across groups and over time. Of the five groups considered, graduates with a disability and from non-English speaking backgrounds experienced the worst outcomes, whereas graduates from low socio-economic status backgrounds and regional, rural and remote areas fared comparatively well. Indigenous graduates experienced inconsistent outcomes that changed markedly with time since graduation. These findings bear important implications for policy and practice in relation to both higher education and the labour market.