Controlling for innate ability

See how the income outcomes of tertiary pathways compare when controlling for NCEA Level 2 results

In the article Income ouctomes, when tracking the incomes of 19 year olds following different training pathways, we found that at age 26 trainees from BCITO, Competenz, Connexis, Skills Org and MITO had a yearly income that was $6000 higher than university graduates.

To achieve this analysis, we use NCEA Level 2 results as a control for innate ability. When this is applied, we find the income differential at age 26 is much higher at $14,500 for those who gain an NCEA Level 2 achieved endorsement and $22,000 for those who gained either a merit or excellence endorsement. This shows that those who performed academically better in secondary school do not need to pursue university training to achieve their full earning potential.

This difference is in part explained due to inflation, given the NCEA Level 2 control was conducted with a cohort four years later due to Ministry of Education record limitations, however this would only account for up to 15% of the difference found.

In terms of cumulative income, the average 26 year old male NCEA Level 2 achiever from one of the five ITOs we distinguished has earned $163,000 more than the average university graduate. This difference is $173,000 for their merit/excellence NCEA Level 2 counterparts.


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