Different subject choices at university between men and women contribute to a gender pay gap in the years straight after graduation, an analysis suggests.
Male graduates earn on average 25% more per year than female graduates by the age of 30 – before most graduates start having children, according to research by the Institute for Fiscal Studies (IFS).
The pay gap opens up immediately after graduation, with the average male graduate earning 5% more than the average female graduate at the age of 25.
This is despite the fact that women are more likely to get a first class degree or a 2:1 than men.
Women disproportionately choose to study subjects that yield low financial returns.
Xiaowei Xu, senior research economist at IFS
Most of the initial gap can be explained by degree subject choices as women are less likely to study subjects that lead to high-paying jobs, researchers said.
Women make up less than a third of graduates in economics, a subject with high financial returns, and nearly two-thirds of graduates in creative arts, which have low financial returns.
Previous research from the IFS estimates that studying economics at university boosts women’s pay by 75% by age 30 – more than 10 times the return from studying creative arts (7.2%).
The report concludes: “When it comes to a subject like economics, which delivers the very highest financial return for female (and male) graduates, there is an additional concern that many students cannot access the subject at all because it is not offered in their school.”
It adds: “More needs to be done to educate and inform young people about subject choices at A-level and university, particularly in a system like the UK where subject choices narrow at an early stage and where decisions taken early can have long-lasting effects.”
The IFS said that subject choice continues to contribute to the gender pay gap over time, but its relative importance fades as other factors, such as having children and working part-time, come into play.
Xiaowei Xu, a senior research economist at IFS and author of the report, said: “Women disproportionately choose to study subjects that yield low financial returns.
“Of course, money isn’t – and shouldn’t be – the only factor when it comes to choosing what to study.
“But more needs to be done to inform young people about the financial consequences of degree choices, and to overcome gender stereotypes, so that women are not locked out of high-paying careers by choices at a young age.”
Arun Advani, an IFS research fellow, said: “Economics leads to the highest paying jobs for graduates, but many students have limited knowledge of what it is about and some cannot access the subject at all because it is not offered in their school. This puts them off studying it at university.”