What Does A Low Earnings Premium Tell Us About Equality Of Opportunity In NZ?

New Zealand has a far lower “college degree premium” than most other OECD countries. This implies that the relative supply of degree qualified people is higher in New Zealand – and yes, far more people have at least a bachelor’s degree.

Why is this? Well, it is far easier for a typical New Zealand high school graduate to enter university and complete a degree than most other countries. If you’ve ever looked at the nonsensical demands of the US college application process, you’d probably agree with me that counting our blessings is a good place to start.

I would argue that the return on a college education is significantly higher in the US because there are far greater barriers to entry for non-traditional entrants to higher education. You are less likely to find adults retraining at a US college unlike at a New Zealand university.

New Zealand is not perfect, but students who carefully choose their major and build valuable skills have extremely good odds of social mobility. But the value of the qualification is the access to formal employment. Everything else is trivial if you are actually concerned about income inequality and labour market outcomes.

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