The impact of living costs on the returns to higher education

This research uses the Longitudinal Education Outcomes (LEO) dataset to estimate the impact of living costs on the earnings returns to different undergraduate degrees at age 27. The research investigated how adjusting for differences in living costs based on individuals' area of residence affects estimates of the returns to different universities and subjects. Newly linked data on area of residence in early adulthood is used to explore where graduates live during this period of their lives and estimate how returns to higher education change once gross earnings are adjusted for differences in living costs across the UK.

The report begins by demonstrating the large differences in where graduates from different universities after leaving education. Overall, the research finds that adjusting for living costs can substantially decrease the earnings return to some higher education institutions and subjects but does little to change their ranking and hence only has a limited impact on which institutions and subjects are the best choice in terms of returns. Importantly, there are no universities going from having significantly negative returns to having significantly positive returns of vice versa once adjustments are made for cost of living.

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