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Mind the Gap? Estimating the Effects of Postponing Higher Education

Author

Listed:
  • Bertil Holmlund
  • Qian Liu
  • Oskar Nordström Skans

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. The reduction of lifetime earnings associated with two years postponement of higher education amounts to 40-50 percent of annual earnings at age 40.

Suggested Citation

  • 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.
  • Handle: RePEc:ces:ceswps:_1792
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    References listed on IDEAS

    as
    1. Oskar Nordström Skans & Per-Anders Edin & Bertil Holmlund, 2009. "Wage Dispersion Between and Within Plants: Sweden 1985-2000," NBER Chapters,in: The Structure of Wages: An International Comparison, pages 217-260 National Bureau of Economic Research, Inc.
    2. Audrey Light, 1995. "The Effects of Interrupted Schooling on Wages," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 472-502.
    3. James J. Heckman & Lance J. Lochner & Petra E. Todd, 2003. "Fifty Years of Mincer Earnings Regressions," NBER Working Papers 9732, National Bureau of Economic Research, Inc.
    4. Gronau, Reuben, 1988. "Sex-Related Wage Differentials and Women's Interrupted Labor Careers--The Chicken or the Egg," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 277-301, July.
    5. Jacob Mincer & Solomon Polachek, 1974. "Family Investments in Human Capital: Earnings of Women," NBER Chapters,in: Marriage, Family, Human Capital, and Fertility, pages 76-110 National Bureau of Economic Research, Inc.
    6. V. Joseph Hotz & Lixin Colin Xu & Marta Tienda & Avner Ahituv, 2002. "Are There Returns To The Wages Of Young Men From Working While In School?," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 221-236, May.
    7. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    8. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2006. "Earnings Functions, Rates of Return and Treatment Effects: The Mincer Equation and Beyond," Handbook of the Economics of Education, Elsevier.
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    11. Smith, Jeremy & Naylor, Robin, 2001. " Determinants of Degree Performance in UK Universities: A Statistical Analysis of the 1993 Student Cohort," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(1), pages 29-60, February.
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    14. 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.
    15. Monks, James, 1997. "The impact of college timing on earnings," Economics of Education Review, Elsevier, vol. 16(4), pages 419-423, October.
    16. James W. Albrecht & Per-Anders Edin & Marianne Sundström & Susan B. Vroman, 1999. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 294-311.
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    Citations

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    Cited by:

    1. 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.
    2. Maria K. Humlum & Jannie H.G. Kristoffersen & Rune Vejlin, 2012. "Timing of College Enrollment and Family Formation Decisions," Economics Working Papers 2012-01, Department of Economics and Business Economics, Aarhus University.
    3. Dr Richard Dorsett & Dr Silvia Lui & Dr Martin Weale, 2010. "Economic Benefits of Lifelong Learning," National Institute of Economic and Social Research (NIESR) Discussion Papers 352, National Institute of Economic and Social Research.
    4. Pekkarinen, Tuomas & Uusitalo, Roope & Pekkala Kerr, 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).
    5. Annette Bergemann & Gerard J. Van Den Berg, 2008. "Active Labor Market Policy Effects for Women in Europe - A Survey," Annals of Economics and Statistics, GENES, issue 91-92, pages 385-408.
    6. Hallberg, Daniel & Lindh, Thomas & Žamac, Jovan, 2011. "Study achievement for students with kids," Working Paper Series 2011:16, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    7. Philip de Jong & Maarten Lindeboom & Bas van der Klaauw, 2011. "Screening Disability Insurance Applications," Journal of the European Economic Association, European Economic Association, vol. 9(1), pages 106-129, February.
    8. Sören 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.
    9. Katarina Keller & Panu Poutvaara & Andreas Wagener, 2009. "Military Draft And Economic Growth In Oecd Countries," Defence and Peace Economics, Taylor & Francis Journals, vol. 20(5), pages 373-393, October.
    10. Gartell, Marie, 2009. "Stability of college rankings - A study of relative earnings estimates applying different methods and models on Swedish data," Working Paper Series 2009:19, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    11. Avdic, Daniel & Gartell, Marie, 2011. "The study pace among college students before and after a student aid reform: some Swedish results," Working Paper Series, Center for Labor Studies 2011:15, Uppsala University, Department of Economics.
    12. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
    13. 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.
    14. repec:eee:labeco:v:48:y:2017:i:c:p:215-230 is not listed on IDEAS
    15. Anders Stenberg & Xavier Luna & Olle Westerlund, 2014. "Does Formal Education for Older Workers Increase Earnings? — Evidence Based on Rich Data and Long-term Follow-up," LABOUR, CEIS, vol. 28(2), pages 163-189, June.
    16. 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.

    More about this item

    Keywords

    timing of education; schooling interruptions; returns to work experience;

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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