Education is typically the most important resource affecting in allocation to different labour market positions.  University qualification is usually in relation to higher employment outcomes, such as higher occupational status and wage level than lower level degrees. With educational expansion, the field of study has also become a key definer of university graduates’ labour market outcomes, but less is known about the differences in outcomes within study fields.      

 Both occupational attainment and a particular income level are ultimately contingent to hiring process in labour market. The signaling theory assumes that the value of higher education degree in the process is based on the premise that the degree indicates the capabilities of graduates. In addition to the level of degree, the signaling value of higher education is related to study field and particular degree. Since the employers can’t get direct information of job-seekers’ ability, they need to trust on signals that convey the information. Along with educational credentials, there are other signals used by the employers in recruiting. The work experience is important, but other characteristics, such as gender, are also used in signaling the job-seekers. However, with the current substantial growth of higher education, a higher education degree is considered as less reliable signal. Thus, the other attributes are used in making difference between applicants who have a degree. Due to this trend, it is claimed that the value of higher education in labour market has been inflated. However, this argument has been criticized. Instead of inflation, polarization of professional labour markets into “good” and “bad” jobs has been presented. The higher education expansion has generated more diversification in graduate employment outcomes.

The aim of the presentation is to examine the employment outcomes of university
graduates by focusing on salaries; in other words, the monetary rewards of the
university degree from different study fields. The average salaries of the
graduates from different fields are compared to explore the signaling value of
university degree by study field. However, since the averages do not provide
knowledge on the whole range of salaries, the wage variances by degree are
studied to illuminate the whole picture of the salaries in different study
fields. In addition, the average wages are examined by gender and by the
employment sector (private/public).

The study utilizes the register data (e.g. Student Register, Employment Statistics) collected by Statistics Finland. The sample of one third of Finnish university entrants in year 2001 were traced through their studies. At the end of year 2009 less than two thirds (n=3,693) had completed the master’s degree and entered the labour market. These graduates form the target group of the study. The data is analyzed by statistical methods (means, regression analysis, analysis of variance).

The main results of the analysis suggest that the wages of university graduates from different study fields vary in a historically persistent way: the medicine graduates reached the highest wage level, and the graduates of arts and humanities reached the lowest ones. The wage variances usually vary with income level. The study fields of law and technology make a difference with their higher salaries and modest variance. It can be assumed that in the field of law that is related to bargaining power of professional occupational group. The smaller variation of salaries of the graduates from the field of technology cannot be explained in an unambiguous way. As general rule, the male gender and private sector employment increase the salary level, but it does not apply to all study fields. In terms of wage level, the public sector employment is more often beneficial for women. In all, the wages as an outcome of university degree are strongly differentiated by study field, gender and employment sector, and there is differing variation also within each group. The theoretical conclusion is that the signaling theory applies as regards to the differences between study fields, indicating different signaling value of degrees from different domains. The theory is also supported by the results of wage variance, referring to a set of variables: a degree and individual qualities have an effect on salary level. The pay differentials between and within the study fields follow the recent trend of increasing wage differences. However, it needs to be noticed that the wage differences are not necessarily related to other qualities of the job.

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