Returns to Tertiary Education in Germany and the UK: Effects of Fields of Study and Gender

During the last decades most industrialised countries have experienced a rapid expansion of tertiary education enrolments. The sector of tertiary education became more differentiated through the creation of many different subjects, fields and curricula of study. At the same time, men and women tend to prefer different fields of study which likely also provide different opportunities on the labour market. In this study we examine the returns of tertiary education regarding the fields of study and gender differences in Germany and the United Kingdom. As an indicator for educational returns we take the opportunity of entering into the service classes. Given the review of different institutional arrangements we expect that the two countries have considerable differences in the linkage between tertiary education and labour market. Additionally, we expect that the different outcomes of educational credentials between female and male graduates are related to the different choices of study fields in the tertiary education. Based on the generally close linkage between the level of education and labour market in Germany and the rather weak signal function of educational credentials in the UK, we expect that firstly the overall educational returns to tertiary education would be greater in Germany, but that secondly the effects of fields of study as an additional selection factor for graduates would be greater in the UK. Results of empirical analyses confirm both of these hypotheses. An interesting result with respect to the gender differences in educational outcomes is that Germany shows a smaller gender difference in outcomes, but this rather egalitarian result disappears if the type of jobs, e.g. parttime vs. full-time jobs, is controlled for. In general, we find smaller gender differences in class outcomes in Germany than in the UK, but that is called into question by the greater likelihood of German women to be employed in part-time jobs.