Parental income has an effect on what you earn when you graduate, new research reveals

Caitlin Morrison
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Graduates from richer family backgrounds earn significantly more than their poorer counterparts (Source: Getty)

Everyone knows that what and where you study has an impact on earnings – but now it’s been confirmed that your parents’ income has an effect as well.

Graduates from richer family backgrounds earn significantly more than their poorer counterparts, even after completing the same degrees at the same universities, according to new research from the Institute for Fiscal Studies (IFS), the Institute of Education, Harvard University and the University of Cambridge.

Looking at tax data and student loan records for 260,000 students, the IFS found that the average gap in earnings between students from higher- and lower-income backgrounds was £8,000 a year for men and £5,300 a year for women, ten years after graduation in 2012/13.

And even after “taking account of subject studied and the characteristics of the institution of study”, the IFS found the average student from a higher-income background earned about 10 per cent more than the average student from other backgrounds.

By far the highest earners 10 years out of university were medical students, according to the study, followed by economics graduates. For men, median earnings for medical graduates were about £50,000 after 10 years, and those for economics graduates were about £40,000.

Meanwhile, the worst off are those who don’t graduate at all – non-graduates are twice as likely to have no earnings as graduates are ten years on.

“This work shows that the advantages of coming from a high-income family persist for graduates right into the labour market at age 30,” said Jack Britton, a research economist at the IFS.

“While this finding doesn’t necessarily implicate either universities or firms, it is of crucial importance for policymakers trying to tackle social immobility.”

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