Doctoral graduates will only start to benefit financially from their PhD more than 30 years after embarking on their studies, according to a new study.

Drawing on data from the UK Data Service¡¯s Labour Force Survey (LFS), researchers found that doctoral graduates enjoy a PhD ¡°pay premium¡± of about ?3 an hour more than master¡¯s degree holders, earning ?26 an hour on average compared with ?23 an hour respectively.

That pay premium rose to ?6 an hour if the PhD graduate gained a managerial position, adds the paper published in .

However, the costs of taking a PhD ¨C including doctoral fees, the years of lost income and the loss of accrued experience in employment ¨C could mean that PhD graduates are worse off financially until several decades later.

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Even if the PhD graduate obtains a scholarship of ?18,000 a year to fund their studies, a doctorate is likely to cost them about ?90,000 by the time they enter the workplace, claims the analysis, by Giulio Marini of the University of Catania and UCL¡¯s Golo Henseke.

Noting it ¡°takes time to fully exploit the PhD premium¡±, the paper finds that PhD graduates will take 33 years to catch up financially on a master¡¯s degree holder, on average, resulting in a modest payoff for most PhDs assuming they retire after 36 years in the workforce.

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That catch-up point is much earlier, however, if PhD graduates are women (28 years), work in the public sector (23 years) or take a STEM degree (20 years).

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Dr Marini said the single most significant factor was whether a PhD helped graduates achieve a managerial position.

¡°It is very likely that PhDs will always have a decent income, or more than decent,¡± said Dr Marini. ¡°However, considering the time to get it, the main issue is, ¡®How could I pass from just decent into something more?¡¯ Leadership is our answer.¡±

The study highlights the potential oversupply of UK-based PhD graduates, with their number rising from 383,000 in 2012 to 579,000 in 2021, a 51 per cent increase, of whom only half work in academia.

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For PhD graduates choosing to work in academia there is a 20 per cent ¡°pay penalty¡± compared with other sectors.

¡°These decisions are apparently not all about the money,¡± said Dr Henseke. ¡°However, keeping the direct (tuition) and indirect (lost earnings) costs in mind can help sharpen thinking about what it is people want to get out of a PhD.¡±

jack.grove@timeshighereducation.com