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Does temporary interruption in postsecondary education induce a wage penalty? Evidence from Canada

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  • Fortin, Bernard
  • Ragued, Safa

Abstract

Almost 40% of Canadian youth who left postsecondary education in 1999 had returned two years later. This paper investigates the extent to which schooling discontinuities affect post-graduation starting wages and whether the latter are influenced by the reasons behind these discontinuities. We use data from the 2007 National Graduate Survey. We apply Lewbel’s (2012) generated instruments approach. The source of identification is a heteroscedastic covariance restriction of the error terms that is a feature of many models of endogeneity. We also perform two-stage quantile regressions. We find a positive effect on wages of temporary interruption for men who held a full-time job during their out-of-school spell(s). Both men and women witness a wage decrease if their interruption depends on health issues. Women bear a wage penalty if their interruption is due to a part-time job, to lack of money, or is caused by reasons other than health, work, and money.

Suggested Citation

  • Fortin, Bernard & Ragued, Safa, 2017. "Does temporary interruption in postsecondary education induce a wage penalty? Evidence from Canada," Economics of Education Review, Elsevier, vol. 58(C), pages 108-122.
  • Handle: RePEc:eee:ecoedu:v:58:y:2017:i:c:p:108-122
    DOI: 10.1016/j.econedurev.2017.04.001
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    Cited by:

    1. Sènakpon Fidèle A. Dedehouanou & Luca Tiberti & Hilaire G. Houeninvo & Djohodo Inès Monwanou, 2019. "Working while studying: Employment premium or penalty for youth in Benin?," Working Papers PMMA 2019-03, PEP-PMMA.

    More about this item

    Keywords

    Schooling interruption; Wages; Temporary attrition; Postsecondary education; Lewbel IV; Two-stage quantile regression; Box-Cox;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education

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