The Labour Market Effects of Qualifications

This study for Futureskills Scotland by Professor Ian Walker and Dr Yu Zhu, used Scottish data to examine and attempt to quantify the specific labour market benefits of qualifications to individuals. However, the analysis acknowledges that skills and knowledge are often difficult to measure. Therefore, because qualifications are easier to measure they are used in this case as a proxy for skills.

The research attempts to quantify the labour market benefits of qualifications for the Scottish labour market as a whole, using broad qualification levels. The results are for Scotland ‘in the round’ and show that:

• qualifications pay – additional qualifications increase the earning potential of workers;
• having a qualification also helps in finding and sustaining work – three-quarters of working-age Scots with five Standard Grades are in work, compared to half of working age Scots with no qualifications;
• graduates continue to earn more than non-graduates – the wage premium associated with a degree has been maintained in recent years; and
• education and training makes the difference – the employment and wage benefits associated with qualifications reflect the knowledge gained and its value in the labour market.

In general, the analysis shows that the value of qualifications in Scotland is broadly similar to that experienced across the rest of Great Britain and that qualifications have two main labour market benefits:

• they can help people find and sustain employment; and
• better qualified workers generally earn higher wages than workers with few or no qualifications.

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