A recent study by the C.D. Howe Institute has proven what students have long been told: the more educated you are, the more money you'll earn.

The study, entitled “The Payoff: Returns to University, College and Trades Education in Canada, 1980 to 2005,” examined the financial returns for various levels of education, from high school diplomas to trade school certifications to college diplomas to university degrees.

The purpose of the study, authored by Daniel Boothby and Torben Drewes, was to determine whether the Canadian government is over-investing in post-secondary education. The authors questioned whether or not Canada was producing too many highly educated individuals, and therefore, whether the market was saturated with skilled grads.

The answer was a resounding no.

Drewes, a professor of economics at Trent University, was surprised to find “the continued high returns in spite of the growing supply of the college grads - there still seems to be a demand for them.”

He said he encourages college students to think of their education as an investment, and not necessarily to head to university to make more money. “If you simply look at raw earnings, the earnings of a university graduate are much higher than that of a college graduate.”

However, after calculating the time and money invested into a college or university education, “the rates of return are actually very similar between the two,” Drewes said. He added that any return over 10 per cent is considered a solid investment, and college and university educations often have returns well over this number.

Therefore, students who think a degree from a university is more valuable than a college diploma are quite mistaken, he said. “The income difference doesn't make sense if that's what drives people.”

Education does make a difference in income in terms of continuing beyond high school. The study found that female university graduates who worked full-time earned more on average (60 per cent more in 2005) than female high-school graduates.

The study also found that, in 2005, male grads with a trades certificate earned 12 per cent more, on average, than male high-school graduates. Female graduates from trades programs, on the other hand, saw no significant earnings difference. “The downside is that women are just not getting any rewards from trades,” said Drewes. “Not because it's a male-dominated area ... but because two-thirds of them are going into hair-styling ... and many of the rest are going into the culinary arts. Those are the trades that don't provide returns.”

These findings could be useful for the Canadian government, who could use this information to efficiently distribute scarce education funds, he said.

“Your degree will help you, even if it's not in your field of study,” he said. “The kinds of skills you pick up with a low-level arts degree . . . are essential skills you need to survive in the labour market.”