Private school graduates earn 12% more, but it’s not because of education

Private school students with university qualifications end up earning on average 12% more than their public school counterparts, as new research suggests “non-cognitive” skills obtained in school make them more likely to achieve management roles.

Research from the University of Melbourne has found wage growth of school leavers tracked equally at first, but when people reached 15-25 years out of school, differences in their earnings started to emerge.

Analysing the wage growth of people with tertiary-level qualifications, Nikhil Jha and Cain Polidano of the Melbourne Institute of Applied Economic and Social Research found a $3-an-hour wage disparity emerged between those educated at a Catholic school and those who went to a public school after 20 years.

The research is the first of its kind looking at the non-educational benefits of attending a private school.

Co-author of the study Polidano told SmartCompany the findings were a surprise.

“Our initial feeling was that we didn’t think there would be a difference in wage progression. Or else there would be a difference early on,” he says.

“We know that private school kids are more likely to achieve higher university entrance scores, which can place them into jobs with higher salaries such as law or medicine.”

Polidano says the fact the wage difference isn’t seen until later in life indicates it could be the result of “non-cognitive skills”.

“These skills include how you deal with people, how you solve problems and other soft skills which are important in management,” he says.

Despite the wage disparity during a person’s “prime-time” of their career, the study found it was unlikely to persist into the later years of one’s career.

In early years the average wage rates for Catholic and government school attendees was much the same at $24 and $23 an hour respectively, but by the time people were 15-25 years out of school the difference had increased to $3.

Government school educated workers earned on average $27 an hour, while former Catholic school students earned $30 an hour. For a person working 40 hours a week, this equates to an extra $120 per week.

Polidano says the reason why this difference occurs isn’t definitive. However, it’s likely people who go to private schools spend more time doing extracurricular activities

“They do more activities like sport and debating and these types of activities do help with other skills which pay off in the labour market,” he says.

“Education isn’t just about time in the classroom. It’s about social participation, being involved in activities which help develop kids’ social skills, and this is an important message. It’s not just about getting into university; it’s about developing those other skills.”

Polidano says for parents who decide to send their children to public school, they can consider encouraging them to play more sport and participate in activities outside of school.

“We know if you have further education, you’ll get better outcomes, but our study controls for that… It’s well known going to private schools give you an educational benefit, but this is saying there are benefits over and above those which are completely in the classroom,” he says.

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