Grades and Labour Market Earnings in Canada: New Evidence from the 2018 National Graduates Survey

Abstract

This study examines how postsecondary education grades influence the labour market earnings of workers in Canada, and the moderating effects of field of study, level of study, gender, work experience during school, and all education and formal education acquired since graduation. We analyze cross-sectional data from the Public Use Microdata File (PUMF) of the 2018 National Graduates Survey (NGS) which follows the 2015 cohort of graduates three years after graduation. Unlike previous waves of the NGS, the 2018 data contain explicit information on the final grade averages awarded to graduates of postsecondary education programs. Using a two-stage least square regression method, we find that the overall grade point average is positively related to earnings, and this result is robust to model specification. This suggests that higher grades are – with some exceptions – important as they do translate into higher labour market earnings. However, work experience and additional education or training tend to somewhat mitigate these effects, suggesting that the strength of the grade average signal to employers is weakened.