1 Júlia Varga Hungarian Academy of Sciences Institute of Economics SEBA – IE CASS - IEHAS Economics of Crisis, Education and Labour Chinese - Hungarian International Conference , Budapest The Labour Market Value of Higher Education in the 2000s in Hungary: Effects of the Field of Study and Institution of Graduation

2 Sharp increase in the supply of higher education graduates Number of works document how the average return to higher education has changed in Hungary, but very little is known about the causes of differences in labour market success among graduates Large differences in earnings and employment probability across fields Wage dispersion of higher education graduates has increased Motivation SEBA – IE CASS - IEHAS Conference Budapest

3 SEBA – IE CASS - IEHAS Conference Budapest Number of graduates, Year Full-time studentsTotal

4 SEBA – IE CASS - IEHAS Conference Budapest Wage returns to higher education (%) by level of education (college/university) Based on data of Hungarian Wage Tariff Surveys. Dependent variable: (log) earnings; Control variables: educational categories dummies, gender, experience, experience squared. The percentage effect is (e ß –1) × 100 %. N (Total ): thousands; N ( young): thousands

5 Research question Does the field of study and the institution of graduation affect early labour market success (earnings and employment probabilities) of graduates? SEBA – IE CASS - IEHAS Conference Budapest

6 Data Survey of Hungarian Higher Education Graduates 2010 Representative sample of graduates in 2007 Sample 10 % of the population of graduates (4507 persons) 10 fields of study, 25 institutions SSEBA – IE CASS - IEHAS Conference Budapest

7 Average monthly net earnings and employment rates by field of study Field of study Net monthly earning 000 HUF Employment rate % Business, economics Informatics Law Engineering Social Medicine Agrarian Humanities Science, mathematics Teacher training Total SEBA – IE CASS - IEHAS Conference Budapest

8 SEBA – IE CASS - IEHAS Conference Budapest Within-field variation in average earnings Business, economics

9 SEBA – IE CASS - IEHAS Conference Budapest Within-field variation in employment probability

10 SEBA – IE CASS - IEHAS Conference Budapest Measurement problems non-random selection of students into different fields of study and different institutions more able students are admitted to more selective institutions and fields of study factors may influence both the choice of field of study and of institution and earnings (abilities)

11 SEBA – IE CASS - IEHAS Conference Budapest Measurement problems two methods are used to control for the potential self-selection of graduates effect of field of study: propensity score matching method, average treatment effect on the treated effect of institution: HLM-like regressions with field of study * institution fixed effects

12 SEBA – IE CASS - IEHAS Conference Budapest Method 1. Effect of the field of study propensity score matching method – average treatment effect on the treated E(Y 1 |D=1) – E(Y 0 |D=1) P(X)=Pr(D=1|X)=E(D|X) E[Y 1 |D=1,P(X)]-E[Y 0 |D=0,P(X)] D =1 treated: person graduated from the given field of study D=0 control: person graduated from another field of study Y1 – outcome measures (earnings, employment probability) X – observed covariates

13 SEBA – IE CASS - IEHAS Conference Budapest Method 1. Effect of the field of study gender, age group dummies (>27 ; 27-35; 35<) educational attainment of father and mother (educational category dummies) parents or grandparents have qualification from the same field of study in which the person graduated type of settlement dummies type of secondary school dummies institution/field specialization was the first choice of the graduate the person completed his/her studies in the normal length of time (yes=1, no=0) Matching methods: nearest neighbor method (ATTND) and stratification method (ATTS) Independent variables (observables):

14 Field of studyEarnings effect Employment effect Matching method ATTSATTNDATTSATTND Agrarian Not significant Humanities Not significant Not significant Business, economics Not significant Law Not significant Teacher training Social Not significant Science Not significant Not significant Results 1. Effect of the field of study SEBA – IE CASS - IEHAS Conference Budapest

15 SEBA – IE CASS - IEHAS Conference Budapest Methods 2. Effect of the institution of graduation (i=1….N) (1) (2) where, q INTt = from (1)

16 SEBA – IE CASS - IEHAS Conference Budapest Methods 2. Effect of the institution of graduation Two outcome measures: 1) y i = Net earnings – OLS 2) y i = Employment probability -probit Weighted Least Squares Weights= : inverse of var q INTt estimated from (1) (1) (2)

17 SEBA – IE CASS - IEHAS Conference Budapest Methods 2. Effect of the institution of graduation – step 1 gender, age group dummies (>27 ; 27-35; 35<) educational attainment of father and mother (educational category dummies) parents or grandparents have qualification from the same field of study in which the person graduated type of settlement dummies type of secondary school dummies Institution/field specialization was the first choice of the graduate the person completed his/her studies in the normal length of time (yes=1, no=0) Independent variables

18 SEBA – IE CASS - IEHAS Conference Budapest Methods 2. Effect of the institution of graduation – step 2 Field of study dummies Institution dummies College quality: - applicants/admitted - number of students per professor Independent variables

19 Results 2. Effect of the institution of graduation X Significant employment effect Significant earnings effect Both effects are significant bgf bme bmf df nyf pe pte sze zskf Earnings effect -201 Employment effect SEBA – IE CASS - IEHAS Conference Budapest

20 SEBA – IE CASS - IEHAS Conference Budapest Conclusions some fields of studies have casual effect on early labour market success of graduates earnings of graduates from business and economics and from law are higher earnings and employment probabilities of graduates from teacher training are lower no robust effects of the institutions, with the exception of BGF (higher wages, lower employment probabilities)

21 Thank you! SEBA – IE CASS - IEHAS Conference Budapest