ACER eNews


Education and training and the avoidance of financial disadvantage ACER research released by NCVER in July investigates to what extent different types of education and training reduce the risk of experiencing financial disadvantage. Education and training and the avoidance of financial disadvantage by ACER Principal Research Fellow Dr Gary Marks examined the relationship between post-school qualifications and financial disadvantage among adult Australians between 2001 and 2008 using data from the HILDA longitudinal study. The study focused on four dimensions of financial disadvantage: income poverty; financial stress; unemployment; and low wealth. The post-school vocational education and training (VET) qualifications examined are certificates I/II, III/IV, diplomas and advanced diplomas. The university qualifications examined are: bachelor degrees, postgraduate certificates and diplomas, and higher degrees. Marks found that post-school qualifications in education and training differ in their effects on the four dimensions of financial disadvantage. For income poverty, defined as living in a household with an income of less than 50 per cent of median equivalised disposal household income, all post-school education and training reduces the risk of experiencing this type of financial disadvantage. This is because post-school qualifications enhance labour market outcomes such as increasing time spent working and promoting full-time work rather than part-time work or unemployment. Furthermore, Marks found that the higher the educational qualification, the lower the percentage living in income poverty. For example, in 2008, among those whose highest qualification was less than Year 12, 20 per cent were in poverty, compared to around 11 per cent of people with certificate I/II and less than four per cent of those with bachelor degrees. Financial stress is defined in the study as two or more instances in a single year of cash-flow problems such as having trouble paying household costs and utility bills on time, going without meals, or asking for financial help. In general, the impact of post-school qualifications on financial stress was much weaker than their effects on income poverty, with no qualification able to significantly reduce the chances of experiencing financial stress. Marks suggests that this is because financial stress reflects consumption as well as income and includes financial management, making the concept quite distinct from income poverty. For unemployment, only a bachelor degree, a VET diploma and a trade certificate were found to significantly reduce the chance of becoming unemployed. Marks found that this can be accounted for by the qualifications’ promotion of higher levels of experience in work and, in the case of bachelor degrees, higher-status jobs. Almost all post-school qualifications reduce chances of falling into the low-wealth group, defined in the study as those households with less than 25 per cent of median household wealth, adjusting for household size. Graduate diplomas or certificates, advanced diplomas and trade certificates could be said to moderately reduce the incidence of low-wealth, while weaker effects were found for bachelor degrees and entry-level VET certificates. Certificate III/IV qualifications, however, had no significant effects of reducing the incidence of low wealth. Policymakers may be interested in the findings from fixed effects analyses which indicate that qualifications, net of all other stable influences, do not substantially reduce the probability of financial disadvantage. The notable exception is a bachelor degree for income poverty. Also of interest are the strong protective effects of marriage and partnering on reducing financial disadvantage. One of the policy recommendations from this study is that improving labour market outcomes, reducing the incidence of unemployment and increasing the time spent in full-time work are more direct policy initiatives for reducing financial advantage than simply increasing the levels of qualifications. The research formed part of the Australian Government’s National Vocational Education and Training Research and Evaluation Program, which is coordinated and managed by the National Centre for Vocational Education Research (NCVER) on behalf of the Department of Education, Employment and Workplace Relations (DEEWR). The full report is available from http://research.acer.edu.au/transitions_misc/9/ « Back to eNews
Copyright © Australian Council for Educational Research 2013 All rights reserved. Except under the conditions described in the Copyright Act 1968 of Australia and subsequent amendments, no part of this electronic publication may be reproduced, stored in retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without written permission. Please address any requests to reproduce information to communications@acer.edu.au Subscribe Unsubscribe Australian Council for Educational Research Private Bag 55, Camberwell, Victoria Australia 3124 Tel: + 61 3 9277 5555 Fax: + 61 3 9277 5500 Web: www.acer.edu.au

ACER research released by NCVER in July investigates to what extent different types of education and training reduce the risk of experiencing financial disadvantage.

Education and training and the avoidance of financial disadvantage by ACER Principal Research Fellow Dr Gary Marks examined the relationship between post-school qualifications and financial disadvantage among adult Australians between 2001 and 2008 using data from the HILDA longitudinal study.

The study focused on four dimensions of financial disadvantage: income poverty; financial stress; unemployment; and low wealth. The post-school vocational education and training (VET) qualifications examined are certificates I/II, III/IV, diplomas and advanced diplomas. The university qualifications examined are: bachelor degrees, postgraduate certificates and diplomas, and higher degrees.

Marks found that post-school qualifications in education and training differ in their effects on the four dimensions of financial disadvantage.

For income poverty, defined as living in a household with an income of less than 50 per cent of median equivalised disposal household income, all post-school education and training reduces the risk of experiencing this type of financial disadvantage. This is because post-school qualifications enhance labour market outcomes such as increasing time spent working and promoting full-time work rather than part-time work or unemployment. Furthermore, Marks found that the higher the educational qualification, the lower the percentage living in income poverty. For example, in 2008, among those whose highest qualification was less than Year 12, 20 per cent were in poverty, compared to around 11 per cent of people with certificate I/II and less than four per cent of those with bachelor degrees.

Financial stress is defined in the study as two or more instances in a single year of cash-flow problems such as having trouble paying household costs and utility bills on time, going without meals, or asking for financial help. In general, the impact of post-school qualifications on financial stress was much weaker than their effects on income poverty, with no qualification able to significantly reduce the chances of experiencing financial stress. Marks suggests that this is because financial stress reflects consumption as well as income and includes financial management, making the concept quite distinct from income poverty.

For unemployment, only a bachelor degree, a VET diploma and a trade certificate were found to significantly reduce the chance of becoming unemployed. Marks found that this can be accounted for by the qualifications’ promotion of higher levels of experience in work and, in the case of bachelor degrees, higher-status jobs.

Almost all post-school qualifications reduce chances of falling into the low-wealth group, defined in the study as those households with less than 25 per cent of median household wealth, adjusting for household size. Graduate diplomas or certificates, advanced diplomas and trade certificates could be said to moderately reduce the incidence of low-wealth, while weaker effects were found for bachelor degrees and entry-level VET certificates. Certificate III/IV qualifications, however, had no significant effects of reducing the incidence of low wealth.

Policymakers may be interested in the findings from fixed effects analyses which indicate that qualifications, net of all other stable influences, do not substantially reduce the probability of financial disadvantage. The notable exception is a bachelor degree for income poverty. Also of interest are the strong protective effects of marriage and partnering on reducing financial disadvantage.

One of the policy recommendations from this study is that improving labour market outcomes, reducing the incidence of unemployment and increasing the time spent in full-time work are more direct policy initiatives for reducing financial advantage than simply increasing the levels of qualifications.

The research formed part of the Australian Government’s National Vocational Education and Training Research and Evaluation Program, which is coordinated and managed by the National Centre for Vocational Education Research (NCVER) on behalf of the Department of Education, Employment and Workplace Relations (DEEWR).

The full report is available from http://research.acer.edu.au/transitions_misc/9/