LONDON (BLOOMBERG) - If you want to earn more money, it helps to be a man with rich parents and to go to the London School of Economics (LSE). That's the finding of a study of 260,000 British graduates in their first years after leaving university.
A decade after graduation, the gap in annual earnings between the children of wealthy parents and those from poorer backgrounds was £8,000 (S$15,300) for men and £5,300 for women in 2012-13. Even controlling for degree course and university, children of the rich earned 10 per cent more than students from an average family.
It's not just your parents that make a difference. It's perhaps not much of a surprise that, a decade after leaving university, 10 per cent of graduates from England's two ancient universities, Oxford and Cambridge, were earning more than £100,000 a year. But researchers were surpassed by a more recent arrival. Graduates of the LSE were the highest paid of all. It alone had 10 per cent of female graduates earning above £100,000.
The researchers from four US and British institutes and universities looked at tax data and student loan records for 260,000 graduates to generate the report. Published in the week that Prime Minister David Cameron was forced to defend his late father's tax affairs and release details of money he'd inherited, it suggests that rich parents pass on much more than just money to their children, including so-called soft skills such as personal presentation and interview technique.
"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 Institute for Fiscal Studies in London and an author of the study. "While this finding doesn't necessarily implicate either universities or firms, it is of crucial importance for policy makers trying to tackle social immobility."
On average, the best-paid graduates a decade out were medical students, with median earnings of £50,000, followed by economists, with £40,000. Those studying the creative arts did worst of all, earning no more than people who didn't attend university.
"For most graduates, higher education leads to much better earnings," said Anna Vignoles of Cambridge University, another of the report's authors. "Although students need to realize that their subject choice is important in determining how much of an earnings advantage they will have."