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

Author

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  • Fortin, Bernard

    () (Université Laval)

  • Ragued, Safa

    () (Laval University)

Abstract

Data from the Youth in Transition Survey reveal that almost 40% of Canadian youth who left post-secondary education in 1999 had returned two years later. This paper investigates the extent to which schooling discontinuities affect post-graduation starting real wages and whether the latter are differently influenced by the reasons behind these discontinuities. We analyse this issue using data from the 2007 National Graduate Survey. We take covariates endogeneity into account using Lewbel's (2012) generated instrument approach. The source of identification is a heteroscedastic covariance restriction of the error terms that is a feature of many models of endogeneity. To allow for individual heterogeneity in the causal effect of various reasons for schooling interruption, we also provide results from two-stage quantile regressions using Lewbel's generated instruments. Conditional on the levels of schooling and experience, we find a positive effect on wages of temporary schooling interruption for men who had held a full-time job during their out-of-school spell(s). Both men and women witness a wage decrease if their interruption is associated with health issues. Women also 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, 2016. "Does Temporary Interruption in Postsecondary Education Induce a Wage Penalty? Evidence from Canada," IZA Discussion Papers 10158, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10158
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    References listed on IDEAS

    as
    1. Stratton, Leslie S. & O'Toole, Dennis M. & Wetzel, James N., 2008. "A multinomial logit model of college stopout and dropout behavior," Economics of Education Review, Elsevier, vol. 27(3), pages 319-331, June.
    2. Neil S. Seftor & NSarah E. Turner, 2002. "Back to School: Federal Student Aid Policy and Adult College Enrollment," Journal of Human Resources, University of Wisconsin Press, vol. 37(2), pages 336-352.
    3. repec:mpr:mprres:3250 is not listed on IDEAS
    4. Wayne Thomas, 2001. "The Decision to Return to Full-time Education," Education Economics, Taylor & Francis Journals, vol. 9(1), pages 37-51.
    5. Monks, James, 1997. "The impact of college timing on earnings," Economics of Education Review, Elsevier, vol. 16(4), pages 419-423, October.
    6. Weiss, Yoram, 1971. "Learning by doing and occupational specialization," Journal of Economic Theory, Elsevier, vol. 3(2), pages 189-198, June.
    7. Christopher A. Pissarides, 1992. "Loss of Skill During Unemployment and the Persistence of Employment Shocks," The Quarterly Journal of Economics, Oxford University Press, vol. 107(4), pages 1371-1391.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    schooling interruption; wages; temporary attrition; delayed graduation; 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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