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Labour Market Outcomes and Schooling in Canada: Has the Value of a High School Degree Changed over Time?

  • Daniel Parent

The objective of this paper is to analyze the school-to-work transition process of young Canadians, particularly individuals with low levels of education, and to situate it in the context of the evolution in the value of a high school diploma over the 1981-1996 period, conditional on not pursuing post-secondary education. To do so I make use of Statistics Canada's School Leavers Survey and its Follow-Up (SLSF) which contains details on the earnings, job, and training histories in addition to a wealth of information on student performance in high school, family background, and the incidence of work while in school. To provide a historical perspective, I also use the 1981, 1986, 1991, and 1996 Canadian Censuses to see whether the value of holding a high school diploma (excluding the option value of pursuing post-secondary education) has markedly changed over the last 15-20 years. Evidence from the Censuses shows that 1) the premium to holding just a high school diploma in Canada is substantially lower than in the United States; and 2) labour earnings of high school graduates have stagnated and even decreased relative to those of dropouts, without major changes in the relative employment rates. Again, this is in stark contrast to the U.S. situation where the wage premium to a high school degree has in fact markedly increased over the same period of time. The evidence concerning the wage premium to a university degree is that it has been increasing since the mid 80's. Relative employment rates of university graduates have also increased. Turning to the SLSF, it is shown that high school graduates' labour market outcomes are essentially no better than those of dropouts, except perhaps in terms of employment rates. Finally, having established that the value of holding a high school diploma relative to not having one appears to be relatively small and even to have declined somewhat, we go back to the individuals' decision to leave school either as dropouts or graduates and find that they were very sensitive to the conditions of the local labour market. Those conditions affected their graduation decision through their impact on the probability of having a job or on the number of hours worked in the twelve months preceding the date they left school either as graduates or as dropouts. Overall, the results suggest that we should not, perhaps, be surprised that Canada has both a fairly high rate of dropping out from high school and high enrollment rates in universities. Nous cherchons dans cette étude à examiner le processus de transition de l'école vers le marché du travail et à l'examiner dans le contexte de l'évolution dans la valeur de détenir un diplôme d'études secondaires depuis 1981. Pour ce faire nous faisons usage de deux sources de microdonnées, soit les Recensements de 1981 à 1996 ainsi que le Suivi de l'enquête sur les sortants effectué à l'automne 1995. Les principaux résultats découlant de l'analyse des données de recensement nous indiquent que bien que les diplômés du secondaire aient conservé un avantage en terme de taux d'emploi par rapport aux sortants depuis 1981, l'avantage salarial est demeuré relativement faible et a vraisemblablement diminué. Par ailleurs, l'avantage des diplômés universitaires par rapport aux diplômés du secondaire, que ce soit pour les taux d'emploi ou pour les salaires moyens, s'est quant à lui accru au cours des années. Quant aux données du Suivi, elles nous indiquent qu'il n'y a pas de différence majeure dans le processus de transition vers le marché du travail entre les sortants et les diplômés, que ce soit en terme de la distribution du temps passé entre la fin des études et le début du premier emploi à temps complet ou en terme de la distribution des salaires. Les diplômés du secondaire, tout comme dans le cas des données de recensement, ont toutefois une probabilité plus grande d'avoir occupé un emploi à temps complet. En ce qui concerne l'incidence de la formation appuyée par l'employeur, il semble que les diplômés du secondaire n'aient aucun avantage par rapport aux sortants alors que les diplômés universitaires ont un très net avantage sur l'un ou l'autre groupe, bien que les résultats soient légèrement sensibles à la spécification utilisée. Enfin, ayant établi que le rendement d'un diplôme d'études secondaires est assez faible et donne même des signes de détérioration, j'effectue un retour en arrière de façon à analyser la décision de compléter ou non les études secondaires. Il y est démontré que les jeunes ayant au mieux complété leur secondaire étaient très sensibles aux conditions du marché du travail local. Ces conditions affectaient leur décision de compléter leurs études par le biais de leur impact sur la probabilité d'occuper un emploi douze mois avant la fin de leurs études. Globalement, les résultats nous donnent à penser qu'on ne devrait peut-être pas se surprendre d'observer à la fois un taux élevé d'abandon au secondaire en même temps qu'un taux de fréquentation scolaire élevé à l'université.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 99s-42.

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Length: 61 pages
Date of creation: 01 Nov 1999
Date of revision:
Handle: RePEc:cir:cirwor:99s-42
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  1. Christopher J. Ruhm, 1995. "Is High School Employment Consumption or Investment?," NBER Working Papers 5030, National Bureau of Economic Research, Inc.
  2. Gerald S. Oettinger, 1999. "Does high school employment affect high school academic performance?," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(1), pages 136-151, October.
  3. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
  4. Paul Beaudry & Thomas Lemieux & Daniel Parent, 2000. "What is Happening in the Youth Labour Market in Canada?," Canadian Public Policy, University of Toronto Press, vol. 26(s1), pages 59-83, July.
  5. Lynch, Lisa M, 1992. "Private-Sector Training and the Earnings of Young Workers," American Economic Review, American Economic Association, vol. 82(1), pages 299-312, March.
  6. Richard B. Freeman & Karen Needels, 1991. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Working Papers 3827, National Bureau of Economic Research, Inc.
  7. Marcel Dagenais & Benoit Durocher & Claude Montmarquette & Daniel Parent & François Raymond, 1998. "Travail pendant les études et abandon scolaire : Causes, conséquences et politiques d'intervention," CIRANO Working Papers 98s-32, CIRANO.
  8. David Card & Thomas Lemieux, 2000. "Adapting to Circumstances (The Evolution of Work, School,and Living Arrangements among North American Youth)," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 171-214 National Bureau of Economic Research, Inc.
  9. Gary S. Becker, 1975. "Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, Second Edition," NBER Books, National Bureau of Economic Research, Inc, number beck75-1, May.
  10. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  11. Lara Shore-Sheppard, 1996. "The Precision of Instrumental Variables Estimates With Grouped Data," Working Papers 753, Princeton University, Department of Economics, Industrial Relations Section..
  12. Stephen Cameron & James J. Heckman, 1994. "Determinants of Young Males' Schooling and Training Choices," NBER Chapters, in: Training and the Private Sector: International Comparisons, pages 201-232 National Bureau of Economic Research, Inc.
  13. Peter Gottschalk & Mary Joyce, 1998. "Cross-National Differences In The Rise In Earnings Inequality: Market And Institutional Factors," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 489-502, November.
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