The employment of graduates and their placement in the labour market is one of the key issues in current higher education. Growing number of graduates are facing difficulties in their employment. In parallel with an increasing emphasis on efficiency and quality, higher education institutions are being held more accountable in term of expected benefits for the economy and society. Graduate employment is an important outcome measure.  

Education is the most significant single determinant of occupational and employment success. Human capital theory views education as the most important investment on that type of capital, and it assumes that investment in education is individually and socially worthwhile. Education is seen as way to raise the marginal product of an educated worker relative to one not educated. When an individual makes investment on education and gains additional skills and knowledge, it increases individual’s likelihood to occupational attainment and economic success. (Becker 1993, 17; Kivinen & Ahola 1999; van der Merwe 2010; Strayhorn 2008).

Human capital theory is widely criticized and questioned (e.g. van der Merwe 2010). After educational expansion the investment in higher education is seen also as human risk capital (Kivinen & Ahola 1999). On the basis of several studies, a common outcome is that the younger graduate cohorts seem to be less rewarded for their investment to education compared to their older counterparts.  As the educational level of population rises, the value of qualifications lose their relative value (degree inflation) (Asplund & Leijona 2005, 90-92; Kivinen & Silvennoinen 2002). Noteworthy is, especially, the declining trend in monetary returns (wage premium) of Master level degree in the beginning of 2000’s in Finland. The rate of monetary returns for higher education degree has declined as compared to lower degrees. (Asplund & Maliranta 2006, 66-67). In terms of non-monetary returns, there is found to be decrease in occupational status of later graduate cohort as compared to earlier cohorts (Aho 2003). 

Despite of that, the occupational attainments and monetary rewards of university graduates are higher than those of lower educational levels (e.g. Heinrich & Hildebrand 2005; Schomburg 2007). Both of them are also clearly dependent on the field of study. Graduates from ‘soft’ fields (e.g. humanities) tend to have lower returns than their peers from ‘hard’ fields (sciences, engineering). (Kelly et. al. 2010; Reimer, Noelke & Kucel 2008). By gender there is a clear difference in favor of men who usually gain higher rewards to their education.

The aim of this paper is to investigate 1) how the employment outcomes of graduates differ between study fields in Finland, and 2) how different background factors such as age, previous education, gender, family type (single, married, children) and study career type (drop-out, delayed, lower degree, Master’s degree) influence on monetary and non-monetary employment outcomes measured as average income and occupational status. In sum, the paper asks whether the investment in higher education degree is worth making in the course of universal access to universities. i.e. does it provide returns sufficiently high as compared to lower level degrees.

Aho, M. 2003. Pitääkö koulutus lupauksensa? Sosiologia 4, 313-328. Asplund, R. & Leijola, L. 2005. Education and wage inequality in Finland. In R. Asplund & E. Barth (Eds.) Eduction and wage inequality in Europe. A literature review. The Research Institute of Finnish Economy (ETLA). Series B 212. Helsinki: Taloustieto Oy. 57-116. Asplund, R. & Maliranta, M. 2006. Koulutuksen taloudelliset vaikutukset. Sitran Raportteja 60. Helsinki. Becker, G. S. 1993. Human capital : A theoretical and empirical analysis, with special reference to education. Chicago : University of Chicago Press. Heinrich, G. & Hildebrand, V. 2005. Returns to education in the European Union: A re-assessment from comparative data. European Journal of Education 40(1), 13-34. Kelly, E., O’Connell, P. J. & Smyth, E. 2010. The economic returns to field of study and competences among higher education graduates in Ireland. Economics of Education Review 29, 650-657. Kivinen, O. & Ahola, S. 1999. Higher education as human risk capital. Higher Education 38, 191-208. Kivinen, O. & Silvennoinen, H. 2002. Changing relations between education and work: on the mechanisms and outcomes of the educational systems. International Journal of Lifelong Education 21(1), 44-54. van der Merwe, A. 2010. Does human capital theory explain the value of higher education? A South African case study. American Journal of Business Education 3(1), 107-118. Reimer, D., Noelke, C. & Kucel, A. 2008. Labor market effects of field of study in comparative perspective. An analysis of 22 European countries. International Journal of Comparative Sociology 49(4-5), 233-256. Schomburg, H, 2007. The professional success of higher education graduates. European Journal of Education 42(1), 35-57. Strayhorn, T. L. 2008. Influences on labour market outcomes of African American college graduates: A national study. The Journal of Higher Education 79(1), 28-57.