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Are There Returns to the Wages of Young Men from Working While in School?

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Author Info
V. Joseph Hotz
Lixin Xu
Marta Tienda
Avner Ahituv

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Abstract

This paper examines the impacts of work experience acquired while youth were in high school (and college) on young men's wage rates during the 1980s and 1990s. Previous studies have found evidence of sizeable and persistent rates of return to working while enrolled in school, especially high school, on subsequent wage growth. Such findings may represent causal effects of having acquired work experience while still enrolled in school, but they may also be the result of failure to fully account for individual differences in young adults' capacities to acquire such skills and be productive in the work force later in life. We re-examine the robustness of previous attempts to control for unobserved heterogeneity and selectivity. We explore more general methods for dealing with dynamic forms of selection by explicitly modeling the educational and work choices of young men from age 13 through their late twenties. Using data on young men from the 1979 National Longitudinal Survey of Youth (NLSY79), we find that the estimated returns to working while in high school or college are dramatically diminished in magnitude and statistical significance when one uses these dynamic selection methods. As such, our results indicate a decided lack of robustness to the inference about the effects of working while in school that has been drawn from previous work.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 7289.

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Date of creation: Aug 1999
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Handle: RePEc:nbr:nberwo:7289

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  1. Stephen V. Cameron & James J. Heckman, 1998. "Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts of American Males," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 262-333, April. [Downloadable!] (restricted)
  2. Heckman, James J, 1974. "Shadow Prices, Market Wages, and Labor Supply," Econometrica, Econometric Society, vol. 42(4), pages 679-94, July. [Downloadable!] (restricted)
  3. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March. [Downloadable!] (restricted)
  4. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 120-137 National Bureau of Economic Research, Inc. [Downloadable!]
  5. Heckman, James J. & Robb, Richard Jr., 1985. "Alternative methods for evaluating the impact of interventions : An overview," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 239-267. [Downloadable!] (restricted)
  6. Robert H. Meyer & David A. Wise, 1983. "High School Preparation and Early Labor Force Experience," NBER Working Papers 0342, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Stephenson, Stanley P, Jr, 1981. "In-School Labour Force Status and Post-School Wage Rates of Young Men," Applied Economics, Taylor and Francis Journals, vol. 13(3), pages 279-302, September.
  8. Avner Ahituv & Marta Tienda & Lixin Xu & V. Joseph Hotz, . "Initial Labor Market Experiences of Black, Hispanic and White Men," University of Chicago - Population Research Center 94-5, Chicago - Population Research Center.
  9. Ronald G. Ehrenberg & Daniel R. Sherman, 1987. "Employment While in College, Academic Achievement and Post-College Outcomes: A Summary of Results," NBER Working Papers 1742, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Keane, Michael P & Wolpin, Kenneth I, 1994. "The Solution and Estimation of Discrete Choice Dynamic Programming Models by Simulation and Interpolation: Monte Carlo Evidence," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 648-72, November. [Downloadable!] (restricted)
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  11. James J. Heckman & Christopher J. Flinn, 1982. "New Methods for Analyzing Structural Models of Labor Force Dynamics," NBER Working Papers 0856, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  12. Lisa M. Lynch, 1986. "The Youth Labor Market in the 80s: Determinants of Re-Employment Probabilities for Young Men and Women," NBER Working Papers 2021, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Cameron, Stephen V & Heckman, James J, 1993. "The Nonequivalence of High School Equivalents," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 1-47, January. [Downloadable!] (restricted)
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  14. Christopher J. Flinn & James J. Heckman, 1982. "Models for the Analysis of Labor Force Dynamics," NBER Working Papers 0857, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  15. James J. Heckman, 1989. "Choosing Among Alternative Nonexperimental Methods for Estimating the Impact of Social Programs: The Case of Manpower Training," NBER Working Papers 2861, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  16. Hotz, V Joseph & Robert A. Miller & Seth Sanders & Jeffrey Smith, 1994. "A Simulation Estimator for Dynamic Models of Discrete Choice," Review of Economic Studies, Blackwell Publishing, vol. 61(2), pages 265-89, April. [Downloadable!] (restricted)
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  17. James J. Heckman, 1981. "Heterogeneity and State Dependence," NBER Chapters, in: Studies in Labor Markets, pages 91-140 National Bureau of Economic Research, Inc. [Downloadable!]
  18. Ruhm, Christopher J, 1997. "Is High School Employment Consumption or Investment?," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 735-76, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Christian Dustmann & John Micklewright & Arthur Soest, 2009. "In-school labour supply, parental transfers, and wages," Empirical Economics, Springer, vol. 37(1), pages 201-218, September. [Downloadable!] (restricted)
  2. Häkkinen, Iida, 2004. "Working while enrolled in a university: Does it pay?," Working Paper Series 2004:1, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  3. Christian Dustmann & Arthur Soest, 2007. "Part-time work, school success and school leaving," Empirical Economics, Springer, vol. 32(2), pages 277-299, May. [Downloadable!] (restricted)
    Other versions:
  4. Holmlund, Bertil & Liu, Qian & Nordström Skans, Oskar, 2006. "Mind the Gap? Estimating the Effects of Postponing Higher Education," Working Paper Series 2006:17, Uppsala University, Department of Economics. [Downloadable!]
    Other versions:
  5. Dustmann, Christian & Micklewright, John & van Soest, Arthur, 2004. "In-School Work Experience, Parental Allowances, and Wages," IZA Discussion Papers 1235, Institute for the Study of Labor (IZA). [Downloadable!]
  6. Lingxin Hao & Nan M. Astone & Andrew Cherlin, 2001. "Adolescents' School Enrollment and Employment:Effect of State Welfare Policies," JCPR Working Papers 232, Northwestern University/University of Chicago Joint Center for Poverty Research.
  7. Todd Stinebrickner & Ralph Stinebrickner, 2001. "Working During School and Academic Performance," University of Western Ontario, CIBC Human Capital and Productivity Project Working Papers 20011, University of Western Ontario, CIBC Human Capital and Productivity Project. [Downloadable!]
    Other versions:
  8. Kalenkoski, Charlene Marie & Sabrina Wulff Pabilonia, 2008. "Parental Transfers, Student Achievement, and the Labor Supply of College Students," Working Papers 416, U.S. Bureau of Labor Statistics. [Downloadable!]
    Other versions:
  9. Marigee Bacolod & V. Joseph Hotz, 2005. "Cohort Changes in the Transition from School to Work: What Changed and What Consequences Did it have for Wages?," Working Papers 050618, University of California-Irvine, Department of Economics. [Downloadable!]
  10. Kooreman, Peter, 2005. "The Persistent Segregation of Girls into Lower-Paying Jobs while in School," IZA Discussion Papers 1535, Institute for the Study of Labor (IZA). [Downloadable!]
  11. Ahituv, Avner & Lerman, Robert, 2005. "Job Turnover, Wage Rates, and Marital Stability: How Are They Related?," IZA Discussion Papers 1470, Institute for the Study of Labor (IZA). [Downloadable!]
  12. Corrado Andini & Pedro Telhado Pereira, 2007. "Full-time Schooling, Part-time Schooling, and Wages: Returns and Risks in Portugal," IZA Discussion Papers 2651, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Avner Ahituv & Robert I. Lerman, 2005. "How Do Marital Status, Wage Rates, and Work Commitment Interact?," IZA Discussion Papers 1688, Institute for the Study of Labor (IZA). [Downloadable!]
  14. Yuriy Pylypchuk & Julie Hudson, 2009. "Immigrants and the use of preventive care in the United States," Health Economics, John Wiley & Sons, Ltd., vol. 18(7), pages 783-806. [Downloadable!]
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