How Does Education Determine One’s Future Income?

How Does Education Determine One’s Future Income?

Sukurta: 20 June 2022

MA incomsAfter interviewing the Master’s students at Vilnius University, it became clear that a desire to deepen their knowledge of certain subjects, as well as to receive better and higher positions at work and to work in a field related to their studies were usually the factors motivating them to pursue a Master’s degree. Among the less frequently mentioned reasons for choosing to enter into Master’s degree studies were a desire to change their field of work or to earn more money after receiving their diploma.

Can a qualification higher than a Bachelor’s degree really help an individual secure a higher income, as well as provide the ability to choose a better job and better adapt to the labour market? Eugenijus Dunajevas, an Associate Professor at the Faculty of Philosophy of Vilnius University (VU), conducted a study of former students’ careers. He emphasized that higher education is undoubtedly associated with higher personal competencies and knowledge, which leads to a higher income and a higher position in the labour market.

Older students have a better knowledge of what they want

It goes without saying that if a Master’s degree is chosen without much thought or just to earn a diploma, it may not provide much of a benefit, but if it is chosen with the proper motivation and purposefully, it can be one of the best investments in a person’s life.

According to the VU scientist, this is perhaps why universities often perceive the decision by Bachelor’s graduates to continue their studies as very rational, i.e. it is believed that students weigh all the benefits to be received and the expenses to be incurred during their studies, before then making what is the best and optimal choice for them.

“But the reality is different – students usually make the decision to continue their studies based on a principle of limited rationality – they do not know exactly what they want. However, there is a correlation among those applying for postgraduate studies: the older the person that is enrolling, the better he or she knows why this study is necessary, whether it is to gain a better position in their organization, or they need specific skills or there’s a desire to retrain. Since the motivation of such students is much higher, it is much easier to work with them, as they already know where they will use the knowledge and what benefits they will receive,” shared the lecturer, regarding his experience.

Higher education means a higher income

According to Dr. E. Dunajevas, in general, all investments in human capital (be it education, health, or social affairs) provide a great deal of added value to a country, while higher education brings the greatest benefits to individuals – they will always benefit from it, both in terms of their position and salary and in terms of their employment opportunities.

“The more that a country invests in education, the more people will be able to add value that that country. In theory, Bachelor’s degree studies are considered to be compulsory, as both the individual and the state would suffer greatly if people did not receive this level of education. If people with a Bachelor’s degree bring more benefits to a country, that means the higher the level of education, the greater the benefits for the individual will become, while the state will also benefit,” said the social policy expert.

Postgraduate education creates added value for an individual, often in the form of a higher income.

The level of higher competencies and education that a person achieves is one of the main factors influencing their wage growth. According to the 2020 data from the Career Management Information Systems (KVIS) for Lithuanian higher education students and graduates, the average insured monthly income of the graduates from VU Master’s study programs 12 months after graduation was 30 percent higher than the salaries of those graduating from Bachelor’s study programs.

The average monthly salary of a Bachelor’s degree graduate is 1,385 euros, while the average monthly salary of a Master’s graduate is 1,814 euros.

Employers try to retain highly qualified employees

A Master’s degree not only provides a person with a higher income but also makes them feel at an advantage and more secure in the labour market, especially for desirable jobs or for positions that require higher qualifications and a wider range of skills.

The lecturer assured us that there is a huge difference between undergraduate and graduate students when it comes to working on projects: the former need to have each step explained and be taught everything, while the latter understand the process much better and have experience in certain working methods, so they can work more independently.

“A Master’s degree gives a person new, added competencies and knowledge that allow certain work activities to be performed in a more flexible, diverse, and specialized manner. As a result, Master’s graduates require much less training in an organization. What does this mean for employers? The employers will not want to part with their highly qualified employees, but will want to keep such specialists because it pays off to have them,” explained the scientist.

This was particularly evident in organizations during the COVID-19 pandemic: in the face of economic constraints, combined with declining demand and lower production, the employers first abandoned those who they found least painful to part with, i.e. the unqualified employees. Even in the absence of a crisis, the natural turnover of workers depends largely on the skills of the workers, with the highest turnover recorded among low-skilled workers.

“Crises only further highlight and illustrate the natural situation present in the labour market. Most of the jobs offered do not require advanced qualifications and there is a sufficient supply of such a labour force, both in Lithuania and in other countries throughout the world. But the biggest shortcoming felt is in relation to highly qualified employees, with qualifications that depend directly on the level of education. Even if a person has enrolled in a Master’s study program but did not graduate, he or she has increased their own human capital,” emphasized Dr E. Dunajevas.

Some positions are not available without a Master’s degree

Before making the decision to pursue a Master’s degree, you should carefully consider your career goals: does the job or position you want require a Master’s degree? In many areas of the private sector, a Master’s degree is considered to be a competitive advantage, but not a necessity; however, there are jobs in which education beyond a Bachelor’s degree is a requirement.

“When recruiting employees, the employers usually take into account work experience and competencies, but some of them also value potential employees with a Master’s degree because they see more abilities available in these individuals. In regulated professions, such as that of a lawyer, doctor, psychologist, researcher, etc., a Master’s degree is a necessity,” commented Milda Jankauskienė, a representative of the Employment Service.

According to the representative, a Master’s degree is often necessary for a specific career. for example, in the public sector, managerial positions are quite strictly linked to a master’s degree – the regulations governing employment state that higher education and a master’s degree are required for these positions.

The VU social policy expert is convinced that highly qualified people will always be in demand, and will be needed even more in the future than now.

According to data from the Organisation for Economic Co-operation and Development, in the future, 21 percent of the current jobs in Lithuania may be lost due to the automation of functions, and in another nearly 42 percent of workplaces, the processes could change significantly. This means that new jobs will require higher-skilled employees, who are able to adapt more quickly to change.

“The only scenario where such employees would not be needed is if they managed to create artificial intelligence that was equivalent to a human being in terms of both personality and creativity, that could maintain a full-fledged conversation or ensure human interaction, and that could create a psychological connection with a person. I doubt whether this will ever be the case,” added the VU scientist.