The Consequences of Delaying Entrance into University: Program Specific differences in the Wage Penalties Associated with Less Post-schooling Experience

Because the returns to education depend on the nite horizon of individuals' working lives, human capital models predict that if an individual is going to attend university, she should do so as soon as possible. Delaying university can also mean individuals have fewer years in which to accumulate post-schooling experience. In this paper, we use Danish administrative data to estimate
the wage losses experienced by individuals who accumulate less post-schooling experience because they postponed entry into university following high school. All else equal, experience-related costs of delaying university will be larger when the returns to experience are higher. Using a panel covering 10 years of post-schooling wages, we estimate the returns to experience separately for graduates in different fields of study. We find important dierences in wage proles across the elds of study. Specically, we find that compared to other programs, Arts and Humanities graduates have flatter
wage profiles. These flatter profiles in turn mean that the experience-related wage losses are smaller. For Arts graduates the wage penalty is never more than six per cent. In contrast, the penalty for Social Science graduates who delayed university can be as large as 8 per cent.