Socio-economic backgrounds, choice of disciplines, and post-university labour market performance

At a glance

What we did

Using data from multiple waves of the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this study empirically examined the long-term labour market outcomes of university graduates from different socio-economic backgrounds, with a particular focus on the role of subject choice at university. Our sample comprised of 9,810 observations for 4,910 individuals over three HILDA waves (waves 12, 16, and 20). HILDA also provides information on 15 detailed fields of study, which were divided into high-, middle-, and low-paying categories, with each category containing five fields.

What we found

1. The labour market outcomes of graduates varied according to their field of study. Some fields offer more robust employment opportunities, higher earnings, and greater job satisfaction than others.
2. We found that coming from a non-English-speaking background (NESB) was the only significant socio-economic predictor of field-of-study choice. NESB students were more likely to choose high-paying fields and less likely to choose low-paying fields, suggesting that they are not disadvantaged in education. In contrast, the other four measures of socio-economic backgrounds (namely, Indigenous origin, low socio-economic status (SES) in childhood, father’s unemployment experience during childhood, and living in a single-parent family at age 14) had negligible effects on the likelihood of choosing a high- or low-paying field of study.
3. Of the five socio-economic backgrounds analysed, the labour market challenges faced by NESB workers were the most pronounced. In comparison with their English-speaking background (ESB) counterparts, NESB workers were less likely to be in managerial or professional occupations and had significantly lower weekly earnings. For NESB graduates, their choice of high-paying fields helped to narrow the earnings gap and improve their employment prospects but did not fully close the earnings gap between NESB and ESB graduates. For other disadvantaged groups, the influence of field of study appeared limited, possibly because their field-of-study choices did not differ substantially from those of their non-disadvantaged counterparts.

What we recommend

1. More and clear career guidance and access to information should be provided for students from disadvantaged backgrounds.
2. Targeted support is needed to increase the representation of disadvantaged students in high-return disciplines at university.
3. Policymakers should develop targeted strategies to address the persistent and multifaceted challenges faced by NESB Australians in the labour market.
4. Governments should introduce initiatives to remove structural barriers that limit the career progression of workers from disadvantaged backgrounds, particularly NESB individuals and those who experienced low SES in childhood.

The full report is available for download in PDF [709 KB] or Word [1 MB] format.