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Return On Post-secondary Education Is Narrowing With Too Few Choosing To Study High Demand Areas: CIBC

Stocks in this article: CM

While on average graduates earn more, nearly half of new grads are in fields that underperform

TORONTO, Aug. 26, 2013 /CNW/ - Completing post-secondary education is still the best route to a well paying, quality job in Canada but the premium is dropping as too few students are graduating from programs that are in high demand, finds a new report from CIBC World Markets.

"A higher education may be a necessary condition for a good job in Canada, but it is no longer a sufficient condition," says CIBC Deputy Chief Economist Benjamin Tal who coauthored the report with CIBC Economist, Emanuella Enenajor. "Narrowing employment and earning premiums for higher education mean that, on average, Canada is experiencing an excess supply of post-secondary graduates.

"And despite the overwhelming evidence that one's field of study is the most important factor determining labour market outcomes, today's students have not gravitated to more financially advantageous fields in a way that reflects the changing reality of the labour market."

The CIBC report notes that the proportion of adults in Canada with a post-secondary education is the highest among all OECD countries and the cost of that education is roughly double the OECD average. Yet, more and more of those degree holders fall behind in the earnings scale with the share of Canadian university graduates who make less than half the national median income the largest among all OECD countries.

The CIBC economists found that this is largely the result of the programs Canadians have chosen to study. They examined various reports that have attempted to compute an annualized average "return on investment" (ROI) on education and found stark divergences depending on the field of study.

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