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Does Temporary Interruption in Postsecondary Education Induce a Wage Penalty? Evidence from Canada

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  • Bernard Fortin
  • Safa Ragued

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.
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Suggested Citation

  • Bernard Fortin & Safa Ragued, 2016. "Does Temporary Interruption in Postsecondary Education Induce a Wage Penalty? Evidence from Canada," CIRANO Working Papers 2016s-42, CIRANO.
  • Handle: RePEc:cir:cirwor:2016s-42
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    References listed on IDEAS

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    5. Gaulke, Amanda P., 2022. "Returns to bachelor’s degree completion among stopouts," Economics of Education Review, Elsevier, vol. 86(C).
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    More about this item

    Keywords

    Schooling interruption; Wages; Temporary attrition; Delayed graduation; Lewbel IV; Two-stage quantile regression; Box-Cox;
    All these keywords.

    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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