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

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10 Octobre 2016
Types de publication: 
Cahier de recherche
Auteur(s): 
Bernard Fortin
Safa Ragued
Axe de recherche: 
Enjeux économiques et financiers
Mots-clés: 
Schooling Interruption
Wages
Temporary Attrition
Postsecondary Education
Lewbel IV
Two-Stage Quantile Regression
Box-Cox
Classification JEL: 
C21
C26
C31
I21
I23
I26

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.

Contact: 

Bernard Fortin : Department of Economics, Laval University, IZA, CIRANO bernard.fortin@ecn.ulaval.ca
Safa Ragued : Department of Economics, Laval University, Quebec, Canada. Email: safa.ragued.1@ulaval.ca