Returns to good universities

New research confirms what we’ve long suspected but not quantified - that it does matter what university you attend.
This paper shows that there are significant differences in graduate earnings, depending upon the quality of university. For example, if a university has an RAE score one standard deviation above-average, its graduates earn, on average, 4% more than the average graduate. And a graduate of a top quartile university earns 10-16% more (depending on which measure of quality is used*) than a graduate of a bottom quartile institution.
These differences control for students’ A level scores and other things, and so try to correct for the fact that better universities attract better applicants.
There seems to have been a rise in these returns over time, which suggests that as university numbers have expanded, so too has the premium upon attending a better one.
The paper is, however, silent on the question of whether good universities raise graduate earnings by giving them more skills, or merely by signalling their higher quality. 
This suggests there might be a case for lifting the cap on university tuition fees. The current ceiling, of £3145 a year, has the effect of suggesting that all universities are the same, as almost all charge the maximum. But this is not so.
* There is, however, a negative correlation between the pay of teaching staff and graduate earnings.

Comments

[tom s.]

But wouldn't lifting the cap increase the effect?

[dearieme]

A US study used the neat trick of comparing people admitted by Harvard who accepted their places, and those who rejected the offers and went elsewhere. Even that method has potential flaws. But at least the choice of Harvard - rather than, say, Princeton - excludes the possibility of better teaching at the higher prestige place having any effect.

[Tom Addison]

I reckon it's more to do with people who are going to do well anyway going to good Uni's. I went to an ex-poly Uni, and people in my classes were either not too bright and generally spent most of the time struggling (a lot failed, and if they graduated none got a 2.1 or higher) and those who were naturally bright but did shit in their A levels (because of booze, laziness etc) and either pulled their finger out at Uni or kept to their bad habits and failed or got below a 2.1. Can't see you getting people like that applying to Oxford.

[redpesto]

This suggests there might be a case for lifting the cap on university tuition fees. The current ceiling, of £3145 a year, has the effect of suggesting that all universities are the same, as almost all charge the maximum. But this is not so.

...which would be more or less what the government wanted all along: to signal quality through the price mechanism rather than, say, through the reputation or the quality of the teaching and or the resources. This is more likely to exacerbate the difference between well-endowed universities and those less fortunate: 'We charge more because we're worth it (or we'd like you to think we are)' It then becomes a question of whether students will choose their course based on 'how much?' rather than 'how good?'.

[Starting an Online Business]

One of Labours failed policies in my opinion was the goal to educate half the population to degree level. What a farce - we now have the most over educated call centre staff in the world.

Given how much emphasis has been placed on money rather than 'high' standards, I wouldn't be surprised if more prominent establishments made exams easier to increase results & thus their value.

Sceptical? Me? lol :)