Protección del cliente de correo electrónico

One of the aims of this research is to provide evidence on the way in which young PSGs’ outcomes change early in their careers. Using Census data, we are constrained to use cross-sectional patterns, or changes for synthetic cohorts to build such evidence.

Using age-on-age change as a guide to income growth will be misleading if there are compositional changes by age. For instance, using the difference in income between 22 and 23 year olds as a guide to the future income growth of a 22 year old will be misleading if a large number of high-income PSGs join the ranks of PSGs at age 23.

The size and direction of bias is an empirical question. The scope for compositional change to bias results is large. The number of 20-year-old PSGs is more than double the size of the 18-year-old age group, and a further doubling occurs by about age 23. There are also pronounced compositional changes. In each year, around a third of 18 to 20 year old PSGs are accounted for by just two fields, and in each case, the fields are ones that offer relatively poor employment and income prospects. In 1996, the fields are ‘Office Studies’, and ‘Food, Hospitality and Tourism’. In 2001, they are ‘Computer and Information Science’, and ‘Food, Hospitality and Tourism’.

To examine the actual biases, we adjusted income growth for changes in composition across fields. We compared median incomes for 18 year olds with a weighted average of median incomes by field for 19 year olds, where the weights reflected the field-composition of 18 year olds.10 We found that the biases were relatively small. In fact, for 18 to 20 year olds, income growth is under-stated by 1 to 2 percent due to compositional change, as a result of increasing numbers of relatively low-income PSGs entering. Between ages 21 to 24, the influx of high-income graduates leads to a slight overestimate of age-on-age income growth, of about 1 percent. Beyond age 24, the bias is negligible. Because of the relatively small biases, we make no adjustment for compositional change, and compare simple mean and median incomes across different ages.

Table 3.4 summarises outcomes by age in 2001, and shows changes between 1996 and 2001. The number of PSGs by age rises from around 4,600 at age 18, to over 17,000 at age 23. The growth in numbers by age slows beyond age 23. Proportionately more males join the ranks of PSGs after age 21. This, combined with a relative decline

10 _{There will be some compositional bias remaining in our field-composition-adjusted growth}

estimates. Within fields, there will be changes in the composition across levels of attainment – for example, older cohorts containing a higher proportion of degree PSGs.

in the female employment rate as PSGs age, leads to a decline in the female ratio, from 58.7 percent for 21 year olds, to 53.2 percent for 30 year olds. Between 1996 and 2001 these patterns had, however, become less strong, with faster growth in the female ratio among PSGs over the age of 21, especially over the age of 25.

Table 3.4 Age profiles for PSGs aged 18 to 30

2001 Change from 96 to 01 Age Number Female

Ratio (%) Median Income Employm. Rate (%) Change in Numbers Change in Female Ratio Change in Median Income Change in Emp Rate 18 4602 57.4 6290 63.1 33% -1.1 -7% -3.4 19 7245 56.3 8770 65.5 21% -2.8 -8% -6.2 20 9480 58.2 11570 70.1 19% 0.0 -7% -5.6 21 13563 58.7 12430 73.5 6% 1.0 -7% -3.6 22 15999 57.8 15350 76.4 -3% 2.1 -7% -4.0 23 17379 56.9 21450 79.3 -3% 3.7 -5% -3.7 24 17670 55.2 25570 81.5 -5% 3.8 -3% -3.5 25 17385 55.7 28000 82.2 -3% 5.3 0% -3.1 26 18168 55.4 29260 82.1 3% 6.6 0% -3.0 27 18585 55.0 31000 83.2 7% 7.0 2% -1.2 28 19299 54.7 31940 83.1 12% 7.3 2% -0.7 29 20292 53.4 33000 82.9 17% 5.5 4% 0.4 30 19920 53.2 33690 82.5 12% 6.3 6% 0.4

Median incomes clearly increase with age. Adjusting for compositional change would give an age-income profile that rose slightly faster than the one shown in Table 3.4 and Figure 3.4 between ages 18 and 20, and more slowly between ages 20 and 24.

Consistent with the overall trends discussed earlier, median income and employment rates decreased in almost all age groups from 1996 to 2001, with the exception of a slight increase in the employment rate for 29 and 30 year olds. Between 1996 and 2001, the cross-sectional age-income profile become steeper, with stronger income growth for 27 to 30 year olds PSGs, and lower median incomes for younger age levels. As with the cross-sectional comparison of adjacent ages, the estimates of change over time are also affected by compositional change. Holding the age-specific mix of fields constant as at 1996 reduces the estimated change in median income by around half of one percent. The bias is most pronounced at ages 20 and 28, when the adjustment reduces estimated growth by 1 to 1.5 percent. Actual growth is lower than that shown in Table 3.4 because some of the measured growth is due to an increasing share of PSGs in high-income fields. The changing mix of levels of attainment within fields could further bias the estimates, although the direction of bias is not clear.

Figure 3.4 Median income and employment rates -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 18 19 20 21 22 23 24 25 26 27 28 29 30 Age -10000 -5000 0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 share96 share01 Median96(RHS) Median01(RHS) EmpRate96 EmpRate01

Figure 3.5 shows changes in income dispersion for different ages. Income dispersion decreased from age 18 up to the mid-twenties, and then increased slowly after the age 26. The ratio of median income to the 10th _{percentile is much higher than} the ratio between the 90th percentile and the median income, especially for those aged 25 and under. Both ratios were higher in 2001 than in 1996. There was also an increase in the proportion of 18 to 25 year olds receiving zero incomes, consistent with higher participation in further study and reduced employment rates.

Figure 3.5 Income comparison by year and age

- 1 0 1 2 3 4 5 6 7 8 18 19 20 21 22 23 24 25 26 27 28 29 30 Age -1.5% 0.0% 1.5% 3.0% 4.5% 6.0% 7.5% 9.0% 10.5% 12.0%

Share of zero/neg inc in 96 Share of zero/nge inc in 01 p50/p10 ratio in 96 p90/p50 ratio in 96 p50/p10 ratio in 01 p90/p50 ratio in 01

Comparing 1996 median incomes for each age-group with incomes for the corresponding (5-year older) age group from the 2001 census provides an estimate of

income growth over a five year period. Estimates for each age group are shown in Figure 3.6. The figure shows age-income profiles for 1996 and 2001. It also shows a portion of the 2001 profile shifted to the left by five years, to line up the 2001 incomes by age with the cohort’s age in 1996. The downward sloping line shows the five-year rate of growth of incomes, by age. For 18 year olds, the increase is around 200 percent. While this sounds extremely large, it reflects in part the very low initial median income of around $9,500. Five years later, the median income for this group (as 23 year olds) had risen to around $21,500. However, even the 25-year-old group experienced income growth of more than 20 percent in the intercensal years.

The potential bias from composition change is somewhat magnified when we consider changes across both time and age. Adjusting for differences in the mix of fields between the 1996 and corresponding 2001 age groups reduces the estimated quinquennial income growth. The growth rates in Figure 3.6 are biased upwards by 15 to 70 percentage points for the groups first observed at ages 18 to 22, but by less than 5 percentage points for older ages. Even allowing for the impact of compositional change, young PSGs can expect substantial income growth over their early career.

Figure 3.6 Income change in 5 years for Employed PSGs aged 18 to 30

0 5000 10000 15000 20000 25000 30000 35000 40000 45000 50000 55000 60000 65000 18 19 20 21 22 23 24 25 26 27 28 29 30 Age 0% 20% 40% 60% 80% 100% 120% 140% 160% 180% 200% 220% 240% 260% Median in 96 Median in 01 Median for 5 yrs older in 01

% of growth in 5 yrs(RHS)