Studying beyond age 25: who does it and what do they gain?

Why should we keep studying beyond our mid-20s? After all, education and training at a younger age provide for the longest period over which the return on the investment can be harvested. On the other hand, individuals in their 40s (or even 50s) can expect to work for another 20 years or so, allowing plenty of time to recoup the cost of the investment in education and training.

Using data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey and the Survey of Education and Training (SET), this study investigates what prompts people to participate in education and training at more mature ages, and the impact of this participation on their labour markets outcomes. The report describes the main characteristics of Australians who choose to participate in formal education at more mature ages, investigates a number of potential outcomes of such investments and explores why Australian participation rates are higher than those in other Organisation for Economic Co-operation and Development (OECD) countries. The authors find that more educated individuals are more likely to undertake further education or training.

Key messages

• For males, the desire to change their current employment situation (for example, gain a promotion or obtain a different job) was a key motivator for studying after the age of 25 years. For females, simply getting a job was a major driver, especially for women who were divorced or separated.
• Labour market outcomes differed also by gender. For women who were not employed previously, enrolling in, or completing, a vocational education and training (VET) course increased the likelihood of finding a job by around one-third. For men, completion of university qualifications resulted in higher hourly wages.
• A shared outcome for both males and females was a sustained increase in job satisfaction following the course of study, which may be related to increases in levels of skills use in the job. The increases in reported skills use during and after study are sizeable, particularly for men, and persist after training has been completed.

Overall, Coelli and his colleagues conclude that the positive effects of mature-age education are quite modest, although there are clear examples of positive payoff — women who are not employed, for example. They suggest this supports the notion of targeted, as opposed to universal, government support.

Tom Karmel
Managing Director, NCVER

According to the Organisation for Economic Co-operation and Development (OECD), Australia has one of the highest rates of participation in education among OECD member countries for individuals aged 30 and above (OECD 2010). Adult education can have important social implications, as it may assist in reducing the gap between the skills required by employers and those held by workers, hence increasing economic output. It may also increase social inclusion by improving the employment opportunities of low-skilled workers.

This study investigates the determinants of mature-age participation in education in Australia and its effects on the labour markets outcomes of those individuals who choose to study. We use a broad definition of mature-age education: any study towards a formal education qualification for those aged 25 to 64 years. We also break down our estimates by age group in order to understand whether outcomes differ by when further study is undertaken. Furthermore, we investigate possible reasons for Australia having such a high proportion of adult participation in education compared with other developed countries. Specifically, we compare Australia with Great Britain, a country which shares many cultural aspects with Australia, yet has much lower adult participation rates in formal education.

Our empirical analysis has four components:

1. We provide mature-age education participation rates broken down by age group, gender, level of study, whether studying on a full- or part-time basis, mode of study (on campus or distance), type of institution, number of courses, initial education levels, and main reason for study.
2. We ascertain the specific individual and initial labour market characteristics related to the decision to study at mature ages among the following: initial education levels, work experience, income, marital and dependent status, membership of disadvantaged groups (low parental socioeconomic status, immigrant status, non-English home language, disability status), employment status, wage rates, initial job satisfaction, and use of skills in the initial job.
3. We provide estimates of the effect of mature-age education on a large number of labour market
   and related outcomes. The estimates are constructed using changes in the outcomes from before to after the education spell.
4. We provide estimates of the proportion of the mature-age education participation gap between Australia and Great Britain that can be attributed to differences in underlying population characteristics. A breakdown of the specific differences in characteristics that may contribute to the gap is provided.

One of the main contributions of this investigation is the breadth of the labour market outcomes investigated in the third component. Most prior research has focused on the effects of adult education on a small set of outcomes only, in particular, wage rates and employment probabilities. Taking full advantage of the rich set of variables available in the Household, Income and Labour Dynamics in Australia (HILDA) Survey dataset, we study a large set of outcomes, along with these two standard measures. We also estimate the effects of mature-age study on hours of work, levels of job and life satisfaction, the extent of skills utilisation at work, the probability of holding a permanent versus a casual/fixed-term job, and occupational status (prestige).

The empirical analyses are conducted using data from the HILDA Survey for the period 2001 to 2009. We also use data from the Survey of Education and Training (SET) for 2009 to undertake some of the more detailed breakdowns of participation rates. Finally, the comparison between Australia and Great Britain is carried out using data from the British Household Panel Study (BHPS).

Key findings

Mature-age participation rates in formal education

As expected, current participation rates fall with age, from around 14—15% of those aged 25 to 34 years down to 2—3% for those aged 55 to 64 years. Older individuals are also more likely to be enrolled in vocational education and training (VET) rather than university-level study, particularly at the certificate III/IV level. While some individuals enrol in up to four different courses during the year, the majority only enrol in one. The main reasons provided for engaging in further education differed a little across genders, with males wanting to achieve a promotion or a different job, while females wanted to obtain a job. Both genders were likely to report that the aim of the education was to acquire extra skills for the current job or that it was a requirement of the job. Certificate-level studies attracted the highest number of participants, with many participants already holding a certificate at the same level or even a higher qualification.

The decision to enrol in education

Consistent with the reported participation rates by age group, the probability of engaging in education decreases with age. Apart from age, the individual characteristic most closely related to enrolling was initial education level, with more educated individuals much more likely to enrol than individuals with very little prior education. There are some notable differences between men and women in the characteristics related to participation. For males, participation was negatively related to the initial level of job satisfaction, wage rates and disposable income, while these characteristics were unrelated to female enrolment. Furthermore, while marital status was not related to male participation, engagement is much higher for separated and divorced females relative to married females. This may reflect attempts by women who have experienced a marital disruption to re-enter the workforce by first acquiring a higher or more recent education credential. Note that being born overseas was not related to enrolment; thus, the high enrolment rate in Australia is not driven by the high proportion of immigrants in the Australian population.

Education and labour market outcomes

Among the ten labour market and wellbeing outcomes that we investigated, only a small number were affected by mature-age study. The significant effects that were estimated also differed by gender and education level undertaken. Disposable income increased for females undertaking VET studies (certificates and diplomas) only, while wage rates increased for males undertaking university studies (bachelor and above) only. Male adults who engaged in VET study did report higher levels of job satisfaction, higher use of skills in the job and a reduction in the number of weekly hours of work. They also were more likely to retain employment if they completed their study and gained a qualification. For females, the effects of mature-age education were mostly related to employment status. VET-level studies in particular led to higher levels of satisfaction with employment opportunities and a higher probability of employment among previously non-employed (unemployed or out of the labour force) women. By enrolling in VET, women can increase their probability of finding a job by around 33 percentage points. Enrolment in a bachelor degree or higher also increased the probability of females retaining a permanent job by almost ten percentage points.

Apart from estimating the overall changes in outcomes from before to after an education spell, we also looked more closely at the yearly pattern in outcomes leading up to and after each spell of VET study. By doing so, we can observe whether any effect of mature-age VET study is immediate, or takes time to materialise. Furthermore, the approach also allows us to look for the existence of the phenomenon known as 'Ashenfelter's dip'; that is, whether outcomes dip just before an education spell. For males, there is some evidence that weekly work hours actually fall in the year prior to study and remain at that lower rate after study. Job satisfaction improves during study, with further increases in the years after study. The increased levels of job satisfaction may be related to the clear and persistent increase in the utilisation of skills in the job. For females, disposable income increases for about four years after study, before returning to lower levels. The level of satisfaction with job opportunities rises considerably, starting from the year of study. Weekly hours of work and the probability of employment show an upward trend prior to VET study, with those trends flattening after study. The use of skills in the current job appears to increase after study, although this measure shows more variability across the years for women compared with men.

An international comparison

The average characteristics of the populations of Australia and Great Britain aged 25 to 64 years differ in some important dimensions. In Australia, the average age in this group is younger, the proportion of immigrants is higher, while the proportions who are married and have dependent children are higher. The initial education levels in the populations also differ, with (among other differences) more Australians holding bachelor degrees and more British holding diplomas. We use estimates of the relationships between these characteristics and the probability of enrolling in mature-age education to calculate the proportion of the mature-age education participation rate gap between the two countries that can be attributed to these differences in population characteristics. We find that these characteristics can explain at most 1.6 percentage points of the 14 percentage point gap (or 0.11 of the gap). Thus institutional and preference differences are the more likely candidates for explaining the different enrolment rates in the two countries.

Policy implications

Overall, the positive effects of mature-age education were found to be quite modest and confined to a handful of outcomes. We also found that there are differences in labour market outcomes between men and women in the effects of studying at more mature ages. For women, VET-level study results in gains in income and particularly in the probability of finding a job for those who were previously not employed, indicating potential benefits for individual females and for Australian society more generally. Conversely, the lack of direct monetary returns from mature-age education for males suggests the need for a careful analysis of the societal benefits and costs associated with subsidising mature-age education, particularly for the large number of individuals who have already attained VET qualifications or higher. Cases may still exist where subsidisation is warranted, such as in response to mass retrenchments in declining industries, as negative outcomes may occur without retraining.