GCSEs: Do grades really predict earnings?

As research is published around the impact GCSE grades have on future earnings, principal Ian Pryce calls for insight into whether vocational grades behave in a similar way

Ian Pryce

GCSES: Do grades really predict earnings?

Earlier this month, the Department for Education published an intriguing research report looking at the impact of GCSE grades on lifetime earnings. Clever economists and statisticians from a range of universities looked in particular at the marginal impact on earnings of higher GCSE grades in different subjects.

GCSEs are qualifications that essentially sort students within a cohort. This provides clear signals: a student achieving grade 4 or higher is in the top 65 per cent of the cohort; get a grade 7 or higher and you are in the top 20 per cent.

It seems pretty uncontroversial to expect those with higher grades to earn more, not least because they will be prized by employers with the deepest pockets and universities with the highest entry tariffs.

Nevertheless, it is useful to quantify those advantages. 

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Discounting future earnings to get comparable figures, the study found the average student had discounted earnings of £515,000. Each one grade improvement added £8,500, so if that was replicated across a range of GCSEs your earnings might go up by £96,000 or 20 per cent. Sadly, but unsurprisingly, the benefits accrued more to male students than female, and less to those on free school meals than those who do not qualify for them. Even so, there was a clear benefit.

Food for thought on curriculum management 

The most interesting findings related to the GCSE subject studied. A slightly higher grade in some subjects made a big difference to earnings, in others the difference was minimal.  Equally the gap between grades mattered.

The research covered students studying between 2001-04 because you need to have solid earnings data. However it gives food for thought for curriculum management in colleges today.

The biggest gains per extra grade were in maths (well ahead of other subjects), IT and humanities, though Business and PE also showed big earnings gains. In contrast art and languages, including English, showed much lower gains, just below the sciences. 

When it came to grading the biggest gains were generally between the old grade D and grade C. This is perhaps expected given the focus on the grade C boundary and the notion of it being the lowest pass grade. However in maths a one-grade jump to a B, A or A* gave even bigger earnings gains, as did a jump in English from C to B.

This all begs some interesting questions. It would seem to confirm the wisdom of getting students to continue studying maths and English post-16 and to resit where they narrowly missed the “pass” boundary. It also confirms the financial primacy of maths as a subject that pays well in the employment market.

The data showed that one grade of difference at the lower end G to F, F to E, has very little financial impact, especially in English. Conversely the big gains at the top end suggest there could well be merit in getting students with grades C, B and even grade A (in old money) to resit, knowing that any improvement means bigger future pay packets.

The gains by subject also run counter to the orthodoxy of the EBacc, that studying science and languages is more important than other subjects. This study seems to conclude that, on an economic level at least, these should not be a priority.

“Better grades lead to better earnings” may not be a shock research finding but I think the study points out some valuable things about subjects and grading, and shows where the research could move next. 

Truly exceptional maths students seem to lever big earnings gains over excellent ones, but great linguists don’t seem to be able to gain much over good ones. In economic terms a grade 9 in maths and grade 5 in French is more valuable than the reverse.  

Given the move in recent years to introduce more grading into the vocational arena, with even graded driving tests proposed at one point, it would be useful to see whether earnings behave in a similar way. Do students gaining triple distinctions earn much more than those with merits for example. This could be important information given, in theory, all students could be awarded a distinction.

In the meantime, I’ll be working on my maths skills ready for the next remuneration committee. Though opposing views exist. 

When Roald Dahl’s Matilda is described as a very sweet girl, very bright, who can multiply large sums in her head, the wonderful head Miss Trunchbull explodes: “So can a calculator!”

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Ian Pryce

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