The Economic Effect of Gaining a New Qualification Later in Life

TL;DR

This study investigates the economic benefits of obtaining additional qualifications later in life, finding significant income gains and identifying heterogeneity in effects based on age using advanced machine learning methods.

Contribution

It provides causal estimates of income returns from later-life education and employs machine learning to analyze heterogeneity in effects, which is novel in this context.

Findings

Completing additional degrees increases income by over $3000 AUD annually.

Younger individuals (under 45) gain up to $50 more per week from further qualifications.

Machine learning uncovers sources of heterogeneity in the effects of later-life education.

Abstract

Pursuing educational qualifications later in life is an increasingly common phenomenon within OECD countries since technological change and automation continues to drive the evolution of skills needed in many professions. We focus on the causal impacts to economic returns of degrees completed later in life, where motivations and capabilities to acquire additional education may be distinct from education in early years. We find that completing an additional degree leads to more than \$3000 (AUD, 2019) extra income per year compared to those who do not complete additional study. For outcomes, treatment and controls we use the extremely rich and nationally representative longitudinal data from the Household Income and Labour Dynamics Australia survey (HILDA). To take full advantage of the complexity and richness of this data we use a Machine Learning (ML) based methodology for causal effect estimation. We are also able to use ML to discover sources of heterogeneity in the effects of gaining additional qualifications. For example, those younger than 45 years of age when obtaining additional qualifications tend to reap more benefits (as much as \$50 per week more) than others.