Graduates who received free school meals will earn almost £3,000 a year less than their more affluent peers with similar qualifications working at the same companies, says a new report that suggests class influences pay disparities more than demographics or degree outcomes.

New research by the Resolution Foundation drawing on data on the earnings of 520,000 graduates in England born between 1986 and 1989 found, after 10 years of work, there is a pay gap of 13 per cent (£7,590 per year) between graduates who grew up in poverty – classed as being eligible for free school meals at age 16 – and those who did not.

When adjusted for demographics such as gender, ethnicity and educational attainment (namely university type, degree classification and subject taken), that income gap fell to 7 per cent (£3,800), according to the study published on 24 March, which was funded by the Nuffield Foundation.

Further adjustments related to the regions where graduates are based, plus employment type and firm size, reduced this pay disparity to 5 per cent – equivalent to just over £2,800 a year.

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That “residual” pay penalty may be explained by issues not observed in the Longitudinal Education Outcomes (LEO) data that tracked the same cohort, such as the occupations people work in or their patterns of work, acknowledges the report.

However, the penalty may also “reflect less ‘measurable’ factors, such as differences in professional networks – the contacts and connections that help people learn about opportunities and secure promotions”, it says.

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“It may relate to what sociologists call ‘cultural capital’ – the confidence, manners, and social ease that come from growing up in a professional household and that are valued, consciously or not, in the workplace,” the report adds.

It also speculates the disparity may “reflect differences in the ability to take career risks, given that disadvantaged graduates are less likely to have a family safety net to fall back on” or “may reflect subtle patterns of employer decision-making”.

“What degree you get continues to impact on your earnings a decade into your career, but poorer students are less likely to gain access to the best universities and get the best grades,” said Julia Diniz, economist at the Resolution Foundation.

“And even when they do get the same degree and work at the same firm as more privileged graduates, they still earn thousands of pounds a year less,” she said.

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Policies to address this shortfall might include “reforms to education and the labour market to improve access to high-returns degrees and jobs and to reduce the extent to which childhood disadvantage shapes adult earnings”, says the report.

“Overall, our findings of large and enduring pay gaps provide another reason to tackle child poverty and the long shadow that it casts over the worlds of school and work,” it concludes.

jack.grove@timeshighereducation.com