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Labour Market Outcomes and Skill Acquisition of High-School Dropouts

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Abstract

We estimate the effect that dropping out of high school has on 8 outcomes pertaining to wages, employment and subsequent skill acquisition for youths. Our analysis is based on the older cohort of the Youth in Transition Survey (YITS) for 2003, an ideal data set because it contains a rich array of outcome measures and characteristics on individuals when they are in high school and a few years later. Our analysis indicates that dropouts have poorer wage and employment outcomes, and they do not make up for their lack of education through additional skill acquisition and training. The analysis thereby suggests that policies to curb dropping out could have both desirable efficiency effects (high returns) as well as distributional effects (high returns to otherwise more disadvantaged groups) and potential social spillover effects.

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Notes

  1. Evidence of such sheepskin or credential effects for Canada is given in Ferrer and Riddell (2002) and for the U.S. in Belman and Heywood (1991), Jaeger and Page (1996) and Kane and Rouse (1995).

  2. Taylor (2007) discusses many of the school initiatives designed to deter dropping out.

  3. Johnson et al. (2003) provide experimental evidence indicating that providing information on the benefits of education can foster youths acquiring more education.

  4. Based on Canadian data, Parent (2006) finds that working while in school is associated with a greater likelihood of dropping out, and Bowlby and McMullen (2002) find that to be the case for those who work long hours while in school. Parent (2006) reviews the mixed U.S. evidence in this area.

  5. Reviews of the conceptual and empirical literature are given in Audas and Williams (2001); Bowlby and McMullan (2002); Rumberger 1987, and Vitaro et al. (2001).

  6. The YITS asked information about the respondents’ job(s), up to seven jobs; but most of the youths only had one job in the reference period.

  7. Another alternative would be to rely on differences in minimum wages. However, Campolieti et al. (2005b) found that minimum wages did not have an effect on schooling outcomes in Canada. More specifically, they found no evidence of youths leaving school to queue for jobs after changes in the minimum wages.

  8. Information on grades, peer, teacher, and parent characteristics and attitudes and behaviours while in school was contained in the YITS cycle 1 (1999) file which had to be merged with the cycle 3 (2003) file which contained information on the respondents’ labour market outcomes and characteristics during the reference period of cycle 3.

  9. None of the individuals in our sample were married during the time frame when they were in high school.

  10. Such evidence for Canada is found in Parent (2006) and in Bowlby and McMullan (2002) for students who work long hours while in school.

  11. Canadian evidence on the negative effects for youths is provided in Beaudry and Green (2000) and McDonald and Worswick (1999) as well as in some of the chapters in Picot et al. (2007).

  12. Features of the apprenticeship system in Canada are described in Schuetze (2003) and Sharpe and Gibson (2005).

  13. See, Baker et al. (1999); Campolieti et al. (2005a) and Campolieti, Gunderson and Riddell (2006) and references cited therein.

  14. This lack of positive effects for the disadvantaged is discussed, for example, in reviews by Riddell (1991, 1995). Marquart (1999) and Riddell and Sweetman (2000). Those studies cite similar extensive U.S. evidence.

  15. HRSDC (1997) cited in Marquart (1999, p. 7).

  16. Evidence of the importance of basic education as a foundation for subsequent training is given in Lowenstein and Spletzer (1999) for the U.S; Fortin and Parent (2006) and Parent (2003) for Canada; and Kapsalis (1997) and Coulombe and Tremblay (2006) for international evidence. These studies refer to others with the same conclusion.

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Author information

Authors and Affiliations

  1. Department of Management (Scarborough Campus), Centre for Industrial Relations and Human Resources, University of Toronto, Toronto, ON, Canada

    Michele Campolieti

  2. York University School of Administrative Studies, York University, Toronto, ON, Canada

    Tony Fang

  3. CIBC Chair of Youth Employment, Centre for Industrial Relations and Human Resources, Department of Economics, School of Public Policy and Governance, Centre for International Studies, Institute for Human Development, Life Course and Aging, University of Toronto, Toronto, ON, Canada

    Morley Gunderson

Authors
  1. Michele Campolieti
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  2. Tony Fang
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  3. Morley Gunderson
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Corresponding author

Correspondence to Morley Gunderson.

Appendices

Appendix 1 Variable Definitions and Descriptive Statistics

Variable Name

Definition

Mean

S.D.

Outcome Variables

   

Employed

Had a job in Dec. 2003

0.853

0.354

Stable job

No specific end date to that job

0.840

0.366

Full-time start job

30+ hrs/wk. when first started that job

0.712

0.453

Full-time end job

30+ hrs/wk. when last worked at that job

0.806

0.395

Starting wage

hourly start wage of first job Jan 02–Dec 03

2.202

0.369

Final wage

hourly final wage of first job

2.406

0.426

Training

Took some sort of training

0.356

0.479

Hours on training

Hours spent on training

9.700

37.5

Control Variables

   

(High school graduate)

Highest education high school graduation

0.549

0.498

High school drop out

Highest education below high school graduation

0.451

0.498

(Age 22)

Age 22 as of December 2003

0.381

0.486

Age 23

Age 23 as of December 2003

0.347

0.476

Age 24

Age 24 as of December 2003

0.272

0.445

(Male)

Male

0.637

0.481

Female

Female

0.363

0.481

(Single, never-married)

Includes very small # separated, divorced

0.702

0.457

Married, common law

Married or common law

0.298

0.457

(No children)

Have no children

0.789

0.408

Have children

Have some children

0.211

0.408

(Non-immigrant)

Non-immigrant

0.946

0.227

Immigrant

Immigrant

0.054

0.227

(Non visible minority)

Non visible minority

0.906

0.291

Visible minority

Visible minority

0.094

0.291

(Ontario)

Province of residence at time of survey

0.316

0.465

Newfoundland

Provincial indicator

0.013

0.112

Prince Edward Island

Provincial indicator

0.006

0.080

Nova Scotia

Provincial indicator

0.027

0.162

New Brunswick

Provincial indicator

0.026

0.159

Quebec

Provincial indicator

0.232

0.422

Manitoba

Provincial indicator

0.045

0.208

Saskatchewan

Provincial indicator

0.041

0.198

Alberta

Provincial indicator

0.155

0.362

British Columbia

Provincial indicator

0.139

0.346

Youth unemployment

Provincial unemployment rate youths age 15–24

14.434

3.234

Adult unemployment

Provincial unemployment rate adults age 25–54

7.393

2.880

Appendix 2 Age and Likely Grade for Older B Cohort Age 18–20 in Year 2000

Age

Likely Grade

Year for Older B Cohort

1

–

 

2

–

 

3

–

 

4

–

 

5

Kindergarten

 

6

1

 

7

2

 

8

3

 

9

4

 

10

5

 

11

6

 

12

7

 

13

8

 

14

9 High School

1996 cohort B in HS

15

10 High School

1997 cohort B in HS

16

11 High School

1998 cohort B in HS

17

12 High School

1999 cohort B in HS

18

13 or Univ. 1

2000 cohort B age 18–20

19

U1 or Univ. 2

2000 cohort B age 18–20

20

U2 or Univ. 3

2000 cohort B age 18–20

21

U3 or Univ. 4

 

22

U4 or Post-sec

2004 cohort B interviewed

23

Post-sec

2004 cohort B interviewed

24

Post-sec

2004 cohort B interviewed

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Campolieti, M., Fang, T. & Gunderson, M. Labour Market Outcomes and Skill Acquisition of High-School Dropouts. J Labor Res 31, 39–52 (2010). https://doi.org/10.1007/s12122-009-9074-5

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