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Oxford Economic Papers Advance Access published online on March 19, 2008
Oxford Economic Papers, doi:10.1093/oep/gpn010
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© Oxford University Press 2008 All rights reserved

Mind the gap? Estimating the effects of postponing higher education

Bertil Holmlund*, Qian Liu{dagger},, and Oskar Nordström Skans{ddagger}

*Department of Economics, Uppsala University, Box 513, SE-751 20 Uppsala, Sweden; e-mail: bertil.holmlund{at}nek.uu.se
{dagger}Department of Economics, Uppsala University
{ddagger}Institute for Labour Market Policy Evaluation (IFAU), Uppsala

JEL classifications: I23, J24, J31


  Abstract

This paper estimates the effects on earnings of ‘gap years’ between high school and university enrollment. The effect is estimated by means of standard earnings functions augmented to account for gap years and a rich set of control variables using administrative Swedish data. We find that postponement of higher education is associated with a persistent and non-trivial earnings penalty. The main source of the persistent penalty appears to be the loss of work experience after studies. Two years postponement reduces the present value of lifetime earnings by nearly one half of one year's peak earnings.


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