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 – including doctoral fees, the years of lost income and the loss of accrued experience in employment – 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