The economic value of key intermediate qualifications: estimating the returns and lifetime productivity gains to GCSEs, A levels and apprenticeships

Abstract

This paper makes a contribution to the literature by providing more up-to-date, robust and granular estimates of the economic value of key intermediate qualifications. The specific focus is on [General Certificates of Secondary Education] GCSEs, [Advanced] A levels and apprenticeships at levels 2 and 3. The authors estimate the economic value of qualifications in two ways: first, the authors estimate the wage and employment returns to specific qualifications by comparing the wage and employment outcomes of individuals who hold those qualifications to similar individuals qualified to the level below. This is the most policy relevant comparison group. The authors distinguish between the marginal return - for individuals who hold the qualification as their highest - and the average return - which includes all individuals who hold the qualification; secondly, the authors use these returns to estimate the economic benefit to society generated by individuals achieving these qualifications. This is in the form of the higher lifetime productivity of individuals with the qualification of interest. The authors also take an in-depth look at how to estimate lifetime productivity returns. There are three key messages that emerge from the analysis: intermediate qualifications are highly valued in the labour market: achieving GCSEs, A levels and apprenticeships is associated with significantly higher lifetime productivity; even achieving at very low levels - just one or two GCSE passes compared to none - is associated with large productivity gains; and modest incremental improvements in GCSE attainment also have sizeable lifetime productivity returns, right across the GCSE spectrum.