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Does temporary interruption in postsecondary education induce a wage penalty? Evidence from Canada

Bernard Fortin () and Safa Ragued

Economics of Education Review, 2017, vol. 58, issue C, 108-122

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.

Keywords: Schooling interruption; Wages; Temporary attrition; Postsecondary education; Lewbel IV; Two-stage quantile regression; Box-Cox (search for similar items in EconPapers)
JEL-codes: C21 C26 C31 I21 I23 I26 (search for similar items in EconPapers)
Date: 2017
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Related works:
Working Paper: Does Temporary Interruption in Postsecondary Education Induce a Wage Penalty? Evidence from Canada (2016) Downloads
Working Paper: Does Temporary Interruption in Postsecondary Education Induce a Wage Penalty? Evidence from Canada (2016) Downloads
Working Paper: Does Temporary Interruption in Postsecondary Education Induce a Wage Penalty? Evidence from Canada (2016) Downloads
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