Dynamics of returns to post-school education in Australia, 2001-2024

This study examines the evolution of returns to post-school education in Australia from 2001 to 2024. Across the period, OLS and Heckman estimates show that higher education (HE) is associated with an average hourly wage premium of around 46% relative to individuals with Year 12 or below, while vocational education and training (VET) yields returns of roughly 10%. Returns to both HE and VET increased through the early 2000s, peaked around 2010, and then declined markedly from 2010, revealing substantial dynamics that are obscure when considering the whole sample. Weekly relative earnings fell due to declines in both hourly wages and hours worked. This erosion coincides with rapid growth in the number of post-school graduates, structural shifts toward lower-productivity sectors, and emerging skill mismatches. While returns remain positive, the economic advantage of post-school qualifications has weakened. The establishment of the Australian Tertiary Education Commission (ATEC) in July 2025 to support equity of access and promote post-school education, with a target of 80% tertiary attainment among the working-age population by 2050, may further expand graduate supply and place additional downward pressure on relative wages. These findings highlight the need for an education policy that is closely aligned with labour market conditions to ensure both efficiency and equity in Australia’s post-school education systems.