Do Youth from Lower- and Higher-Income Families Benefit Equally from Postsecondary Education? Analytical Studies Branch Research Paper Series

It has been well-documented that postsecondary graduates, on average, earn considerably more than others. Consequently, increasing postsecondary enrollment among youth from lower-income families--through targeted student aid or community outreach programs--may constitute an effective mechanism for promoting upward income mobility. However, there currently exists no evidence of the benefits of a postsecondary education (PSE) for youth from lower-income families per se. Using postsecondary administrative records and income tax records, this study bridges this information gap by estimating the association between earnings and PSE by level of parental income among a cohort of Ontario postsecondary graduates and a comparison group of Ontario youth who did not enroll in a postsecondary institution. The results suggest that the estimated earnings premiums associated with PSE are large and positive for youth from families across the income distribution. In relative terms, the premium is considerably larger for youth from the bottom income quintile than for their counterparts from the top income quintile. Supplementary analyses suggest that these results are not likely due to biases arising from omitted cognitive and noncognitive skills, or to differences in the choice of field of study between youth from different levels of parental income. [This project was funded by the Higher Education Quality Council of Ontario (HEQCO).]