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Causal effects of subsidized career breaks

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  • Nordström Skans, Oskar

    ()
    (IFAU - Insitute for Evaluation of Labour Market and Education Policy)

  • Liljeberg, Linus

    ()
    (IFAU - Insitute for Evaluation of Labour Market and Education Policy)

Abstract

The paper uses a quasi-experimental situation to analyze the effects of career interruptions on future labor market outcomes. Data are generated by a Swedish program that granted career breaks to applicants until funds where exhausted. Comparing approved and declined (due to lack of funds) applications allows us to derive “pure” effects of interrupted career that are not confounded by selection or omitted variables. The results show no significant effects on working hours but give some support for increased retirement probabilities among the oldest workers. The average wage effect is negative and in the order of 3 percent 1–2 years after the break. Further evidence suggests that one reason for the large negative wage effects may be related to changes in jobs and tasks.

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Bibliographic Info

Paper provided by IFAU - Institute for Evaluation of Labour Market and Education Policy in its series Working Paper Series with number 2005:17.

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Length: 40 pages
Date of creation: 30 Jun 2005
Date of revision:
Publication status: Forthcoming as Nordström Skans, Oskar and Linus Lindqvist, 'The wage effects of subsidized career breaks' in Empirical Economics , 2013.
Handle: RePEc:hhs:ifauwp:2005_017

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Postal: IFAU, P O Box 513, SE-751 20 Uppsala, Sweden
Phone: (+46) 18 - 471 70 70
Fax: (+46) 18 - 471 70 71
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Web page: http://www.ifau.se/
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Related research

Keywords: Career interruptions; labor supply; wages; natural experiment;

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References

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  1. Albrecht, J & Edin, P-A & Sundstrom, M & Vroman, S-B, 1996. "Career Interruptions and Subsequent Earning : A Reexamination Using Swedish Data," Papers 1996-23, Uppsala - Working Paper Series.
  2. Heckman, James J & Borjas, George J, 1980. "Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence," Economica, London School of Economics and Political Science, vol. 47(187), pages 247-83, August.
  3. Edin, Per-Anders & Gustavsson, Magnus, 2004. "Time Out of Work and Skill Depreciation," Working Paper Series 2004:14, Uppsala University, Department of Economics.
  4. Gubta, Nabanita Datta & Smith, Nina, 2000. "Children and Career Interruptions: The Family Gap in Denmark," CLS Working Papers 00-3, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
  5. David T. Ellwood, 1982. "Teenage Unemployment: Permanent Scars or Temporary Blemishes?," NBER Chapters, in: The Youth Labor Market Problem: Its Nature, Causes, and Consequences, pages 349-390 National Bureau of Economic Research, Inc.
  6. Jane Waldfogel, 1998. "Understanding the "Family Gap" in Pay for Women with Children," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 137-156, Winter.
  7. Joshua D. Angrist & Guido W. Imbens, 1995. "Identification and Estimation of Local Average Treatment Effects," NBER Technical Working Papers 0118, National Bureau of Economic Research, Inc.
  8. repec:ese:iserwp:2004-20 is not listed on IDEAS
  9. Shelley Phipps & Peter Burton & Lynn Lethbridge, 2001. "In and out of the labour market: long-term income consequences of child-related interruptions to women's paid work," Canadian Journal of Economics, Canadian Economics Association, vol. 34(2), pages 411-429, May.
  10. Gregg, Paul, 2001. "The Impact of Youth Unemployment on Adult Unemployment in the NCDS," Economic Journal, Royal Economic Society, vol. 111(475), pages F626-53, November.
  11. Nordström Skans, Oskar, 2004. "Scarring effects of the first labour market experience: A sibling based analysis," Working Paper Series 2004:14, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  12. Eliason, Marcus & Storrie, Donald, 2004. "The Echo of Job Displacement," Working Papers in Economics 135, University of Gothenburg, Department of Economics.
  13. Christopher J. Ruhm, 1998. "The Economic Consequences Of Parental Leave Mandates: Lessons From Europe," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 285-317, February.
  14. Shoba Arun & Thankom Arun & Vani Borooah, 2004. "The Effect Of Career Breaks On The Working Lives Of Women," Feminist Economics, Taylor & Francis Journals, vol. 10(1), pages 65-84.
  15. Larsson, Laura & Lindqvist, Linus & Nordström Skans, Oskar, 2005. "Stepping-stones or dead-ends? An analysis of Swedish replacement contracts," Working Paper Series 2005:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  16. Ashenfelter, Orley C, 1978. "Estimating the Effect of Training Programs on Earnings," The Review of Economics and Statistics, MIT Press, vol. 60(1), pages 47-57, February.
  17. Moon-Kak Kim & Solomon W. Polachek, 1994. "Panel Estimates of Male-Female Earnings Functions," Journal of Human Resources, University of Wisconsin Press, vol. 29(2), pages 406-428.
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Citations

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Cited by:
  1. Hägglund, Pathric, 2006. "Are there pre-programme effects of Swedish active labour market policies? Evidence from three randomised experiments," Working Paper Series 2006:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Mårten Palme & Ingemar Svensson, 2010. "Incentives to Retire, the Employment of the Old, and the Employment of the Young in Sweden," NBER Chapters, in: Social Security Programs and Retirement around the World: The Relationship to Youth Employment, pages 295-318 National Bureau of Economic Research, Inc.
  3. Bertil Holmlund & Qian Liu & Oskar Nordström Skans, 2006. "Mind the Gap? Estimating the Effects of Postponing Higher Education," CESifo Working Paper Series 1792, CESifo Group Munich.
  4. Laura Hartman & Linus Liljeberg & Oskar Skans, 2010. "Stepping-stones, dead-ends, or both? An analysis of Swedish replacement contracts," Empirical Economics, Springer, vol. 38(3), pages 645-668, June.
  5. Larsson, Laura & Lindqvist, Linus & Nordström Skans, Oskar, 2005. "Stepping-stones or dead-ends? An analysis of Swedish replacement contracts," Working Paper Series 2005:18, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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