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Mind the gap? Estimating the effects of postponing higher education

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  • Holmlund, Bertil

    ()
    (Department of Econoics, Uppsala University)

  • Liu, Qian

    ()
    (Department of Economics, Uppsala University)

  • Nordström Skans, Oskar

    ()
    (IFAU - Institute for Labour Market Policy Evaluation)

Abstract

This paper estimates the effects on earnings of “gap years” between high school and university enrollment. The effect is estimated by means of standard earnings functions augmented to account for gap years and a rich set of control variables using administrative Swedish data. We find that postponement of higher education is associated with a persistent and non-trivial earnings penalty. The main source of the persistent penalty appears to be the loss of work experience after studies. Two years postponement reduces the present value of life time earnings by 40-50 percent of annual earnings at age 40.

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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 2006:11.

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Length: 45 pages
Date of creation: 11 Oct 2006
Date of revision:
Publication status: Published in Oxford Economic Papers , 2008.
Handle: RePEc:hhs:ifauwp:2006_011

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Postal: IFAU, P O Box 513, SE-751 20 Uppsala, Sweden
Phone: (+46) 18 - 471 70 70
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Keywords: timing of education; schooling interruptions; work experience;

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References

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  1. V. Joseph Hotz & Lixin Xu & Marta Tienda & Avner Ahituv, 1999. "Are There Returns to the Wages of Young Men from Working While in School?," NBER Working Papers 7289, National Bureau of Economic Research, Inc.
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  3. Nordström Skans, Oskar & Liljeberg, Linus, 2005. "Causal effects of subsidized career breaks," Working Paper Series 2005:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  4. Griliches, Zvi, 1980. " Schooling Interruption, Work While in School and the Returns from Schooling," Scandinavian Journal of Economics, Wiley Blackwell, vol. 82(2), pages 291-303.
  5. Alan Blinder & Yoram Weiss, 1974. "Human Capital and Labor Supply: A Synthesis," Working Papers 435, Princeton University, Department of Economics, Industrial Relations Section..
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  7. Altonji, Joseph G, 1993. "The Demand for and Return to Education When Education Outcomes Are Uncertain," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 48-83, January.
  8. Jacob Mincer & Haim Ofek, 1982. "Interrupted Work Careers: Depreciation and Restoration of Human Capital," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 3-24.
  9. Jacob Mincer & Solomon Polacheck, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters, in: Economics of the Family: Marriage, Children, and Human Capital, pages 397-431 National Bureau of Economic Research, Inc.
  10. 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.
  11. Light, Audrey & Ureta, Manuelita, 1995. "Early-Career Work Experience and Gender Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 13(1), pages 121-54, January.
  12. Comay, Yochanan & Melnik, A & Pollatschek, M A, 1973. "The Option Value of Education and the Optimal Path for Investment in Human Capital," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(2), pages 421-35, June.
  13. Monks, James, 1997. "The impact of college timing on earnings," Economics of Education Review, Elsevier, vol. 16(4), pages 419-423, October.
  14. Reuben Gronau, 1982. "Sex-Related Wage Differentials and Women's Interrupted Labor Careers--The Chicken or the Egg," NBER Working Papers 1002, National Bureau of Economic Research, Inc.
  15. Heckman, James J. & Lochner, Lance John & Todd, Petra E., 2003. "Fifty Years of Mincer Earnings Regressions," IZA Discussion Papers 775, Institute for the Study of Labor (IZA).
  16. Audrey Light, 1995. "The Effects of Interrupted Schooling on Wages," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 472-502.
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Citations

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Cited by:
  1. de Jong, Philip & Lindeboom, Maarten & van der Klaauw, Bas, 2006. "Screening disability insurance applications," Working Paper Series 2006:15, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  2. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
  3. Hällsten, Martin, 2012. "Is it ever too late to study? The economic returns on late tertiary degrees in Sweden," Economics of Education Review, Elsevier, vol. 31(1), pages 179-194.
  4. S�ren Blomquist & Vidar Christiansen & Luca Micheletto, 2010. "Public Provision of Private Goods and Nondistortionary Marginal Tax Rates," American Economic Journal: Economic Policy, American Economic Association, vol. 2(2), pages 1-27, May.
  5. Forslund, Anders, 2009. "Labour supply incentives, income support systems and taxes in Sweden," Working Paper Series 2009:30, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  6. Bergemann, Annette & van den Berg, Gerard J, 2007. "Active Labour Market Policy Effects for Women in Europe - A Survey," CEPR Discussion Papers 6034, C.E.P.R. Discussion Papers.
  7. Pekkarinen, Tuomas & Uusitalo, Roope & Pekkala, Sari, 2006. "Education Policy and Intergenerational Income Mobility: Evidence from the Finnish Comprehensive School Reform," IZA Discussion Papers 2204, Institute for the Study of Labor (IZA).
  8. Lundin, Daniela & Mörk, Eva & Öckert, Björn, 2007. "Do reduced child care prices make parents work more?," Working Paper Series 2007:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  9. Hallberg, Daniel & Lindh, Thomas & Žamac, Jovan, 2011. "Study achievement for students with kids," Arbetsrapport 2011:12, Institute for Futures Studies.
  10. Humlum, Maria Knoth & Kristoffersen, Jannie H. G. & Vejlin, Rune Majlund, 2014. "Timing of College Enrollment and Family Formation Decisions," IZA Discussion Papers 7905, Institute for the Study of Labor (IZA).

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