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Special Reports - What Difference Does Learning Make to Financial Security?




January 2008

Introduction

The knowledge-based economy is driving a greater-than-ever demand for skills and higher education levels.

The benefits of learning and higher education levels include higher earnings and lower unemployment risks, both of which contribute to individuals´ and families´ financial security.

This short report explores the extent to which financial security is influenced by education.

Please see the Annex for definitions of concepts used in this report.

Contents:

Canadians are achieving ever increasing education levels

Higher education is associated with:

In all provinces and territories, education yields higher earnings

Higher education reduces the risk of experiencing:

Canada compares well to other industrialized countries

Summary

Annex - Some useful definitions

Canadians Are Achieving Ever Increasing Education Levels

Over 40% of Canadian adults had qualifications beyond a high school diploma in 2001:

  • 11% had a trade diploma,
  • 15% had a college diploma,
  • 18% had a university diploma.

As well, more and more Canadians are getting a high school diploma. In 1981, 48% of Canadian adults were without a high-school diploma. In 2001, the proportion had gone down to 31%.


This Chart contains data for Education levels, Canada, various years. Information is available in table below University (2001) = 18 University (1991) = 13 University (1981) = 10 College (2001) = 15 College (1991) = 12 College (1981) = 9 Trades (2001) = 11 Trades (1991) = 11 Trades (1981) = 11 High school (2001) = 25 High school (1991) = 26 High school (1981) = 23 No diploma (2001) = 31 No diploma (1991) = 38 No diploma (1981) = 48 (Percentage of the population aged 15 years and over) Education levels, Canada, various years

Source: Statistics Canada, Census, Catalogue no. 97F0017XCB2001002.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Education levels, Canada, various years (Percentage of the population aged 15 years and over)
No diplomaHigh schoolTradesCollegeUniversity
1981482311910
19913826111213
20013125111518

Higher Earnings

Higher education is associated with higher earnings:

In 2000, those who completed their education with a high school diploma earned on average $4,300 more than those without a high school diploma.

Achieving education beyond high school offered an even greater earnings benefit. On average:

  • a trades or college graduate earned $7,200 more than a high school graduate;
  • a university graduate had earnings nearly double that of a high school graduate ($23,000 more).

This Chart contains data for Earnings, by education level, Canadian dollars, 2000. Information is available in table below University = 48,600 College = 32,700 Trades = 32,700 High school = 25,500 No diploma = 21,200 All levels = 31,800 (population 15 years and over with employment income) Earnings, by education level, Canadian dollars, 2000

Note: Earnings and employment income are used as synonyms here. Average earnings are shown here.

Source: Statistics Canada, Census, Catalogue no 97F0019XCB2001002.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Earnings, by education level, Canadian dollars, 2000 (population 15 years and over with employment income)
All levelsNo diplomaHigh schoolTradesCollegeUniversity
31,80021,20025,50032,70032,70048,600

Greater Savings and Assets

Higher earnings lead to greater savings and assets:

In 2005, the median value of net assets among those who completed their education with a high school diploma was $120,000, some $27,000 more than for those without a diploma.

Canadians with post-secondary education enjoyed even higher levels of net assets from their higher earnings:

  • the median net assets among trades and college graduates was $171,000;
  • the median net assets among university graduates was close to $240,000.
This Chart contains data for Net assets of Canadian families by education level, 2005. Information is available in table below University = 237,400 Trades/College = 171,000 High school = 120,000 No diploma = 92,400 All levels = 148,400 (dollar) Net assets of Canadian families by education level, 2005

Note: 1) Net assets correspond to assets net of debts. See the Annex for more details. The median of net assets is shown here. 2) Education refers to the one of the family member with the greatest income.

Source: Statistics Canada, Survey of Financial Securities 2005. http://www40.statcan.ca/l01/cst01/famil114.htm. Accessed December 19th 2006.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Net assets of Canadian families by education level, 2005 (dollar)
All levelsNo diplomaHigh schoolTrades/CollegeUniversity
148,40092,400120,000171,000237,400

Higher Growth in Earnings

Over the span of a career, higher education means higher growth in earnings:

Over the span of a career, earnings tend to increase with time, peaking around the ages of 50 to 54.

In 2000, growth in average earnings between the ages of 25 and 54 was:

  • 49% for those with a high school diploma,
  • 53% for those with a college diploma,
  • nearly 100% for those with a university diploma.

This growth can be attributed to different career experiences as well as training and learning opportunities.

This Chart contains data for Earnings, by age group and education level, 2000. Information is available in table below 60-64 (University) = 53,644 60-64 (College) = 31,583 60-64 (Trades) = 31,984 60-64 (High school) = 28,577 60-64 (No diploma) = 25,047 55-59 (University) = 58,969 55-59 (College) = 37,273 55-59 (Trades) = 36,503 55-59 (High school) = 33,291 55-59 (No diploma) = 28,060 50-54 (University) = 60,801 50-54 (College) = 40,292 50-54 (Trades) = 38,252 50-54 (High school) = 35,225 50-54 (No diploma) = 29,014 45-49 (University) = 60,295 45-49 (College) = 39,673 45-49 (Trades) = 38,061 45-49 (High school) = 34,591 45-49 (No diploma) = 29,177 40-44 (University) = 58,205 40-44 (College) = 38,713 40-44 (Trades) = 36,542 40-44 (High school) = 32,786 40-44 (No diploma) = 28,303 35-39 (University) = 52,154 35-39 (College) = 36,388 35-39 (Trades) = 34,111 35-39 (High school) = 30,980 35-39 (No diploma) = 26,593 30-34 (University) = 42,847 30-34 (College) = 31,888 30-34 (Trades) = 30,714 30-34 (High school) = 28,373 30-34 (No diploma) = 24,013 25-29 (University) = 31,062 25-29 (College) = 26,400 25-29 (Trades) = 26,319 25-29 (High school) = 23,579 25-29 (No diploma) = 21,161 20-24 (University) = 13,959 20-24 (College) = 14,727 20-24 (Trades) = 17,490 20-24 (High school) = 12,655 20-24 (No diploma) = 14,383 (dollars) Earnings, by age group and education level, 2000

Note: Earnings and employment income are used as synonyms here. Average earnings are shown here.

Source: Statistics Canada, 2005. Education indicators in Canada: Report of the Pan-Canadian Education Indicators Program, Catalogue no. 81-582-XIE.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Earnings, by age group and education level, 2000 (dollars)
20-2425-2930-3435-3940-4445-4950-5455-5960-64
No diploma14,38321,16124,01326,59328,30329,17729,01428,06025,047
High school12,65523,57928,37330,98032,78634,59135,22533,29128,577
Trades17,49026,31930,71434,11136,54238,06138,25236,50331,984
College14,72726,40031,88836,38838,71339,67340,29237,27331,583
University13,95931,06242,84752,15458,20560,29560,80158,96953,644

Higher Income During Retirement

Higher education also contributes to higher income during retirement:

  • In 2000, the median income for seniors with a post-secondary diploma was higher than the median for all levels of education. For university-educated seniors the median income was close to $40,000.
This Chart contains data for Income of seniors, all sources, by education level, Canadian dollars, 2000. Information is available in table below University = 39,700 College = 22,900 Trades = 21,500 High school = 18,300 No diploma = 15,300 All levels = 17,100 (population aged 65 years and over) Income of seniors, all sources, by education level, Canadian dollars, 2000

Note: The median of annual gross income is shown here.

Source: HRSDC calculations using Statistics Canada, Census 2001


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Income of seniors, all sources, by education level, Canadian dollars, 2000 (population aged 65 years and over)
All levelsNo diplomaHigh schoolTradesCollegeUniversity
17,10015,30018,30021,50022,90039,700
  • Seniors with lower levels of education relied more on Old Age Security benefits (OAS/GIS) as a source of income.
  • Seniors with higher levels of education relied more on private pensions.
This Chart contains data for Percentage of income from selected sources, by education level, 2000. Information is available in table below University (Pensions) = 36 University (CPP/QPP) = 13 University (OAS/GIS) = 11 College (Pensions) = 16 College (CPP/QPP) = 19 College (OAS/GIS) = 21 Trades (Pensions) = 11 Trades (CPP/QPP) = 22 Trades (OAS/GIS) = 23 High school (Pensions) = 5 High school (CPP/QPP) = 20 High school (OAS/GIS) = 28 No diploma (Pensions) = 0 No diploma (CPP/QPP) = 21 No diploma (OAS/GIS) = 44 All levels (Pensions) = 0 All levels (CPP/QPP) = 20 All levels (OAS/GIS) = 34 (population aged 65 years and over) Percentage of income from selected sources, by education level, 2000

Note: The median of annual gross income is shown here. The category " Private pensions" includes employer-sponsored pensions and private pension plans but not investment income or savings.

Source: HRSDC calculations using Statistics Canada, Census 2001.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Percentage of income from selected sources, by education level, 2000 (population aged 65 years and over)
All levelsNo diplomaHigh schoolTradesCollegeUniversity
OAS/GIS344428232111
CPP/QPP202120221913
Pensions005111636

In All Provinces and Territories, Education Yields Higher Earnings

  • In 2000, those with a high school diploma earned, on average, anywhere between $900 (Newfoundland) and $12,000 (Nunavut) more than those without a high school diploma.
  • The earnings of a high school graduate were higher than the national average in the Northwest Territories, Nunavut, and Ontario.
This Chart contains data for Earnings, no diploma/high school, by region, 2000. Information is available in table below NU (High school) = 26,722 NU (No diploma) = 14,772 NT (High school) = 31,603 NT (No diploma) = 20,428 YT (High school) = 25,753 YT (No diploma) = 19,265 BC (High school) = 25,671 BC (No diploma) = 21,971 AB (High school) = 25,789 AB (No diploma) = 22,196 SK (High school) = 21,780 SK (No diploma) = 18,288 MB (High school) = 22,921 MB (No diploma) = 19,201 ON (High school) = 27,606 ON (No diploma) = 22,691 QC (High school) = 24,071 QC (No diploma) = 20,553 NB (High school) = 20,395 NB (No diploma) = 17,074 NS (High school) = 20,553 NS (No diploma) = 18,251 PE (High school) = 18,236 PE (No diploma) = 15,058 NL (High school) = 16,860 NL (No diploma) = 15,922 CAN (High school) = 25,477 CAN (No diploma) = 21,230 (dollars) Earnings, no diploma/high school, by region, 2000

Note: Earnings and employment income are used as synonyms here. Average earnings are shown here.

Source: HRSDC calculations using Statistics Canada, Census, Catalogue no 97F0017XCB2001002.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Earnings, no diploma/high school, by region, 2000 (dollars)
CANNLPENSNBQCONMBSKABBCYTNTNU
No diploma21,23015,92215,05818,25117,07420,55322,69119,20118,28822,19621,97119,26520,42814,772
High school25,47716,86018,23620,55320,39524,07127,60622,92121,78025,78925,67125,75331,60326,722
  • Completing post-secondary education (PSE) translated into average earnings that were between $10,700 (Prince Edward Island) and $16,500 (Ontario) higher than the average earnings of those with a high school diploma alone.
This Chart contains data for Earnings, high school/PSE, by region, 2000. Information is available in table below NU (PSE) = 42,829 NU (High school) = 26,722 NT (PSE) = 47,572 NT (High school) = 31,603 YT (PSE) = 38,206 YT (High school) = 25,753 BC (PSE) = 38,028 BC (High school) = 25,671 AB (PSE) = 40,962 AB (High school) = 25,789 SK (PSE) = 32,659 SK (High school) = 21,780 MB (PSE) = 34,426 MB (High school) = 22,921 ON (PSE) = 44,147 ON (High school) = 27,606 QC (PSE) = 35,407 QC (High school) = 24,071 NB (PSE) = 32,044 NB (High school) = 20,395 NS (PSE) = 32,592 NS (High school) = 20,553 PE (PSE) = 28,951 PE (High school) = 18,236 NL (PSE) = 31,361 NL (High school) = 16,860 CAN (PSE) = 39,386 CAN (High school) = 25,477 (dollars) Earnings, high school/PSE, by region, 2000

Note: Earnings and employment income are used as synonyms here. Average earnings are shown here.

Source: HRSDC calculations using Statistics Canada, Census, Catalogue no 97F0017XCB2001002.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Earnings, high school/PSE, by region, 2000 (dollars)
CANNLPENSNBQCONMBSKABBCYTNTNU
High school25,47716,86018,23620,55320,39524,07127,60622,92121,78025,78925,67125,75331,60326,722
PSE39,38631,36128,95132,59232,04435,40744,14734,42632,65940,96238,02838,20647,57242,829

Low Income

Higher education reduces the risk of experiencing low income:

Between 1999 and 2004, 20% of Canadians experienced at least one year of low income.

A lower proportion of Canadians with a post-secondary diploma were likely to experience low income:

  • 17% of trades and college graduates,
  • 11% of university graduates.
This Chart contains data for Proportion of Canadians who experienced low income between 1999 and 2004. Information is available in table below University = 11 Trades/college = 17 High school = 21 No diploma = 24 National average = 20 Proportion of Canadians who experienced low income between 1999 and 2004

Note: Based on after-tax Low Income Cut-Offs. Includes anyone who experienced at least one year of low income. Children aged 16 years and below enter the category "No diploma".

Source: HRSDC calculations using Statistics Canada, Income Trends in Canada, catalogue no 13F0022XIE.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Proportion of Canadians who experienced low income between 1999 and 2004
National averageNo diplomaHigh schoolTrades/collegeUniversity
2024211711

Fewer post-secondary graduates experienced prolonged low income (3 years or more):

  • 11% of Canadians without a diploma,
  • 9% of high school graduates,
  • 5% of trades and college graduates,
  • 3% of university graduates.

Unemployment

Higher education reduces the risk of experiencing unemployment:

Unemployment rates suggest that high school graduates had close to half the risk of being unemployed than individuals without a diploma in 2006.

The unemployment rate was comparatively low among Canadians with post-secondary education:

  • 5.1% for trades and college graduates,
  • 4.0% for university graduates.
This Chart contains data for Unemployment rate, by education level, 2006. Information is available in table below University = 4.0 Trades/ College = 5.1 High school = 6.5 No diploma = 12.3 All levels = 6.3 (percentage of population aged 15 years and over) Unemployment rate, by education level, 2006

Source: Statistics Canada, Labour Force Historical Review, catalogue no 71F0004X.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Unemployment rate, by education level, 2006 (percentage of population aged 15 years and over)
All levelsNo diplomaHigh schoolTrades/ CollegeUniversity
6.312.36.55.14.0

Regardless of Province

Higher education reduces the risks of experiencing low-income and unemployment, regardless of province:

  • In 2006, having a high school diploma reduced the risk of unemployment by 3 (Alberta) to 10 (Prince Edward Island) percentage points, compared to the risk for those without a high school diploma.
This Chart contains data for Unemployment rate, no diploma/high school, by region, 2006. Information is available in table below BC (High school) = 5 BC (No diploma) = 9 AB (High school) = 3 AB (No diploma) = 6 SK (High school) = 5 SK (No diploma) = 8 MB (High school) = 4 MB (No diploma) = 9 ON (High school) = 7 ON (No diploma) = 13 QC (High school) = 8 QC (No diploma) = 15 NB (High school) = 9 NB (No diploma) = 18 NS (High school) = 8 NS (No diploma) = 15 PE (High school) = 11 PE (No diploma) = 21 NL (High school) = 16 NL (No diploma) = 26 CAN (High school) = 7 CAN (No diploma) = 12 (percentage of population aged 15 years and over) Unemployment rate, no diploma/high school, by region, 2006

Source: HRSDC calculations using Statistics Canada, Labour Force Historical Review, catalogue no 71F0004X.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Unemployment rate, no diploma/high school, by region, 2006 (percentage of population aged 15 years and over)
CANNLPENSNBQCONMBSKABBC
No diploma122621151815139869
High school7161189874535
  • Having a post-secondary diploma (PSE), compared to obtaining a high school diploma, was associated with lower unemployment in all provinces. The difference in unemployment rates ranged from 1 (Alberta) to 6 (Newfoundland and Labrador) percentage points.
This Chart contains data for Unemployment rate, high school/PSE, by region, 2006. Information is available in table below BC (PSE) = 4 BC (High school) = 5 AB (PSE) = 3 AB (High school) = 3 SK (PSE) = 3 SK (High school) = 5 MB (PSE) = 3 MB (High school) = 5 ON (PSE) = 4 ON (High school) = 7 QC (PSE) = 6 QC (High school) = 8 NB (PSE) = 6 NB (High school) = 9 NS (PSE) = 6 NS (High school) = 8 PE (PSE) = 7 PE (High school) = 11 NL (PSE) = 11 NL (High school) = 16 CAN (PSE) = 5 CAN (High school) = 7 (pourcentage of population aged 15 years and over) Unemployment rate, high school/PSE, by region, 2006

Source: HRSDC calculations using Statistics Canada, Labour Force Historical Review, catalogue no 71F0004X.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Unemployment rate, high school/PSE, by region, 2006 (pourcentage of population aged 15 years and over)
CANNLPENSNBQCONMBSKABBC
High school7161189875535
PSE511766643334

Canada Compares Well to Other Industrialized Countries

The Canadian earnings advantage of education compares well to that in other industrialized countries:

  • In 2002, high school graduates earned an average of 1.3 times more than those without a high school diploma. This was similar to the earnings advantage for high school graduates in Italy.
This Chart contains data for Ratio of High school earnings to No diploma earnings, selected countries, 2004. Information is available in table below United States = 1.54 United Kingdom = 1.49 Canada = 1.29 Italy = 1.28 France = 1.18 Germany = 1.14 Ratio of High school earnings to No diploma earnings, selected countries, 2004

Note: 1) The data is for the year 2003 for Canada and 2002 for Italy. 2) The ratio of earnings is obtained by dividing the average earnings of the higher education level by the average earnings of the lower education level.

Source: Organisation of Economic and Development Cooperation, Education at a Glance 2006, table A9.1a.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Ratio of High school earnings to No diploma earnings, selected countries, 2004
GermanyFranceItalyCanadaUnited KingdomUnited States
1.141.181.281.291.491.54
  • Canadian university graduates, like university graduates in the United Kingdom, earned about 1.7 times more than high school graduates.
This Chart contains data for Ratio of University earnings to High school earnings, selected countries, 2004. Information is available in table below United States = 1.81 United Kingdom = 1.74 Canada = 1.69 France = 1.63 Germany = 1.63 Italy = 1.53 Ratio of University earnings to High school earnings, selected countries, 2004

Note: 1) The data is for the year 2003 for Canada and 2002 for Italy. 2) The ratio of earnings is obtained by dividing the average earnings of the higher education level by the average earnings of the lower education level.

Source: Organisation of Economic and Development Cooperation, Education at a Glance 2006, table A9.1a.


Warning: This data table may contain very wide content. Horizontal scrolling may be necessary.

Ratio of University earnings to High school earnings, selected countries, 2004
ItalyGermanyFranceCanadaUnited KingdomUnited States
1.531.631.631.691.741.81

Summary

Higher levels of education contribute to financial security through higher earnings, higher earnings growth, lower job loss risk, greater accumulation of net worth, and higher income in retirement.

For example, Canadians with a post-secondary education enjoy:

  • higher earnings, as much as $23,000 on average more than those with only a high school diploma,
  • higher earnings growth over their careers,
  • up to half the incidence of low income of those with a high school diploma,
  • lower unemployment risks, 
  • higher net assets.

The benefits of education are enjoyed by Canadians across the country.

The earnings advantage of education in Canada is similar to that in other industrialized countries.

Annex - Some Useful Definitions

What do we mean by financial security?

Financial security refers to a situation in which income is sufficient to meet the basic needs of a family or individual. Having a stable and well-paying job contributes to financial security. Having savings and assets also contribute to financial security by providing a source of income in the event of job loss and other unexpected problems.

Other Useful Definitions

  • Diploma: refers to any form of qualification - certificate, diploma and degree.
  • Earnings: refers to income from paid work, also referred to as employment income. The annual gross earnings (yearly earnings before taxes) are presented in this document.
  • Education or education level: refers to completed education with a diploma.
  • High school diploma: includes both high school graduates and individuals who have some post-secondary education but who did not complete the program.
  • Low income: refers to a situation in which the income is lower than a level deemed sufficient to meet basic needs.
  • Net assets: refers to total assets (including savings) minus total debts (termed net worth by Statistics Canada). Assets include RRSPs, employer pension plans, financial assets, non-financial assets (principal residence, vehicles and belongings like major appliances, furniture, valuables and collectibles) and equity in business. To obtain net worth, debts such as mortgages, lines of credit and loans are subtracted from assets.
  • PSE: post-secondary education; refers to education after high-school.
  • Post-secondary diploma: refers to all forms of certification from a trade, vocational, college (including Cegep) or university program.
  • Trade diploma: refers to both trade and vocational education completed.

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Date Modified:
2014-11-24