The value of a GCSE has been revealed for the first time, as an official analysis shows that every higher grade is worth an extra £23,000.

For the first time, researchers at the Department for Education (DfE) have quantified the link between better exam results at age 16 and earning potential.

They calculated that pupils who achieve just one grade higher in a GCSE subject will go on to earn an average of £23,000 more over their lifetime.

And students who secure one grade higher than their peers in each of their nine subjects can expect to earn an extra £207,000 before they retire.

The increase in lifetime earnings differs depending on the subject. Each higher grade in a maths GCSE is worth an extra £14,579 over a lifetime while a higher grade in music is worth just £5,453.

Meanwhile, one grade higher in for English literature will lead to £6,504 more; £8,151 for drama; and £11,319 for history.

GCSE grades / increase in lifetime earnings

The higher the grades are, the larger the difference in earning potential will be, researchers found. While the difference between a grade D and a grade C is “marginal”, the report’s authors note that there are “robust returns” for high-achieving pupils who get an A* rather than an A.

For male students, the difference between an A and A*  in maths GCSE is around £35,000, while for women it is less than half this amount. 

The earning potential of men based on one grade difference in their GCSEs was significantly higher than that of women, with male students going on to earn 18 per cent more than their female classmates per grade.

And wealthier children got a better financial return on their GCSEs than their poorer peers, with each child on free school meals earning nine per cent less per grade.

Researchers used the Longitudinal Educational Outcomes (LEO) dataset, which combines school and university records for every child educated at state schools in England with their tax records from HMRC.

They examined the results of two million English pupils who took their GCSEs between 2001 and 2004 and then tracked their earnings throughout their twenties. The team of statisticians then used the UK Labour Force Survey to forecast what their lifetime earnings would be up to retirement age.

GCSE results 2020 – what were the pass rates in each subject?

Nick Gibb, the schools minister, said: “We are taught from a young age to do well at school to better our life chances, and today we see tangible, robust evidence to support this.

“GCSEs equip young people with the knowledge and skills they need to succeed and this data shows how small improvements to grades can have a huge overall impact on people’s lives.”

But head teachers warned that GCSEs create “winners and losers” and said there is an “overwhelming case” to axe the current grading system.

Geoff Barton, general secretary of the Association of School and College Leaders, said: “Nobody is going to be particularly surprised that children who attain higher GCSE grades earn more in their lifetimes because they are obviously more likely to progress to higher education and well-paid jobs.

“What is more surprising is the lack of recognition that we will always have winners and losers in the GCSE grading system because the distribution of grades is determined by a mechanism which means it is largely similar from one year to the next.”

He said that under the current grading system, about one third of children at the age of 16 do not pass their GCSEs in maths and English.

“This is baked into the system. If we persist with this approach there will always be a ‘forgotten third’ who are likely to fare less well in life than other children,” Mr Barton said. “It is a key feature of the cycle of disadvantage which continues to blight our society.”