BUSINESS
10/04/2011 10:41 EDT | Updated 12/04/2011 05:12 EST

Education In Canada: It Pays To Take Time Off School -- But Only If You Work

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Conventional wisdom holds that the most driven students generally proceed through school in a linear fashion, advancing seamlessly from high school to post-graduate studies -- and beyond -- without interruption.

But a new study suggests that, for a certain type of individual, it may pay to delay.

In a working paper released in September by the Canadian Labour Market and Skills Researcher Network, a pair of economists have found that depending on how students use their time off, taking a break before starting college or university can yield substantial, long-term earnings premiums.

According to University of Chicago economist Alicia Menendez, the motivation for the study she undertook with University of Calgary’s Ana Ferrer was to explore the effect of delaying education on the earning potential of the growing number of students who aren’t following the traditional trajectory.

“Around a quarter to a third of post-secondary students have been delaying for more than a year at some point, so it’s a substantial amount of the population that ends up graduating that did not follow that very linear, ‘I finish this degree and go to the next,’” she told The Huffington Post. “So we were looking at some of those numbers and saying, 'OK, what happens when you don’t do exactly that?’”

To answer that question, Menendez and Ferrer mined the 1995 National Survey of Graduates, which tracks the labour market outcomes of university, community college and vocational school grads from across Canada.

What they found was striking: compared to traditional graduates, non-university grads who delayed their post-secondary education earned three per cent more; university grads who took a break, meanwhile, enjoyed an earnings premium of eight per cent over their steady-as-you-go peers.

The earnings premiums for delayers who completed multiple degrees are higher still -- 10 per cent more for non-university grads, and 13 per cent more for those who graduated from university.

“It’s substantial,” says Menendez. “At some point [traditional graduates] catch up, but even when you look at five years after they’ve completed their education, there is still a premium.”

There is, however, an important caveat. In order to earn more than -- or even as much as -- traditional graduates, delayers had to have spent their off years in the labour market. The penalty for taking a break to do something other than work was particularly pronounced for university grads, who earned 20 per cent less than peers who went straight from high school to university. There was no earnings penalty for non-university delayers that didn’t work during their break.

Though Menendez says the study didn’t probe what, precisely, is behind this phenomenon, she speculates that it is directly related to the knowledge gained in the labour market.

“I think there is some learning experience that happens when you are working...you may understand a little bit better how the labour market works, what is in demand, who gets the promotions,” she says. “If you [take a break from] your education to travel around Europe, it’s not quite the same.”

Menendez says the next step is to probe the process that takes place during these delays, to identify what kind of jobs make taking a break worthwhile -- and to better inform prospective post-secondary students about the implications of their decisions.

But she says it is clear that there is something “quite special” about students who are able to spend some time on the job before completing diplomas and degrees.

“These guys distinguish themselves from a graduate that goes [through school] in a continuous way -- not because they stop, but because they stop, they return and they graduate,” she says. “They are highly motivated.”

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