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Mind the Gap? Estimating the Effects of Postponing Higher Education

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  • 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.
    • Handle: RePEc:ces:ceswps:_1792
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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. Aina, Carmen & Baici, Eliana & Casalone, Giorgia & Pastore, Francesco, 2019. "Delayed Graduation and University Dropout: A Review of Theoretical Approaches," IZA Discussion Papers 12601, Institute of Labor Economics (IZA).
    3. 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.
    4. 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.
    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. Richard Dorsett & Silvia Lui & Martin Weale, 2016. "The effect of lifelong learning on men’s wages," Empirical Economics, Springer, vol. 51(2), pages 737-762, September.
    9. 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.
    10. 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.
    11. Mohseni-Cheraghlou, Amin, 2016. "The Aftermath of Financial Crises: A Look on Human and Social Wellbeing," World Development, Elsevier, vol. 87(C), pages 88-106.
    12. 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.
    13. Aina, Carmen & Casalone, Giorgia, 2020. "Early labor market outcomes of university graduates: Does time to degree matter?," Socio-Economic Planning Sciences, Elsevier, vol. 71(C).
    14. Martin Hällsten, 2011. "Late Entry in Swedish Tertiary Education: Can the Opportunity of Lifelong Learning Promote Equality Over the Life Course?," British Journal of Industrial Relations, London School of Economics, vol. 49(3), pages 537-559, September.
    15. Humlum, Maria Knoth & Kristoffersen, Jannie H.G. & Vejlin, Rune, 2017. "College admissions decisions, educational outcomes, and family formation," Labour Economics, Elsevier, vol. 48(C), pages 215-230.
    16. 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 of Labor Economics (IZA).
    17. Carmen Aina & Francesco Pastore, 2020. "Delayed Graduation and Overeducation in Italy: A Test of the Human Capital Model Versus the Screening Hypothesis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(2), pages 533-553, November.
    18. Kelly Foley & Fane Groes, 2021. "Admissions Constraints and the Decision to Delay University," Scandinavian Journal of Economics, Wiley Blackwell, vol. 123(2), pages 478-507, April.
    19. 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.
    20. Karlsson, Linn, 2021. "Never too late? Returning to university after completing secondary education as adults," Umeå Economic Studies 1002, Umeå University, Department of Economics.
    21. Ågren, Martin, 2006. "Prospect Theory and Higher Moments," Working Paper Series 2006:24, Uppsala University, Department of Economics.
    22. 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.
    23. 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.
    24. Jie Chen, 2013. "Housing tenure, residential mobility and adolescents’ education achievement: evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(1), pages 275-294, February.
    25. 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.

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    Keywords

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    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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