How STEM dethroned finance degrees
Finance degrees have been losing out to STEM degrees, a research paper has found.
The paper from Harvard Kennedy school, its school of public policy, has found that not only have Law, Finance, and Management (LFM) degree graduates slipped in wage premium over the last 25 years, in most cases they have fallen behind STEM graduates.
The paper, co-authored by Anna Stansbury, Dan Turner, and Ed Balls (yes – the British former shadow Chancellor) found that of 12 UK regions covering the entire country, LFM degrees were only better paying than STEM in 3 (the East Midlands, the Northeast of England, and Wales).
The premium earned by LFM graduates in 2019 (the last year analysed) compared to 1997 (the first) are also down compared to those without a degree in all regions of the country bar Wales. The premium earned by STEM graduates is also generally down, but not by the same degree – in half of the regions, it was more or less marginal.
This graph shows the changes best. There isn’t a single region in the UK where STEM graduates haven’t grown in demand, as opposed to the declining demand for LFM graduates in all regions except Wales (and Northern Ireland, barely). Even London – a global centre for law, finance, and corporate headquarters – sees a decline in demand.
That being said, it’s not all doom and gloom for LFM types (well, finance and management at least – Law, you’re on your own). If you’re an MBA holder especially, you can expect huge starting salaries – we found that Harvard MBAs can earn between $350k and $392k in investment banking, private equity, or a hedge fund. London isn’t too far from that.
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