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September 1995, Vol. 118, No. 9
Joyce P. Jacobsen and Laurence M. Levin
W omen who interrupt their careers and leave the labor market for family responsibilities often return to find that their wages lag behind those of women at comparable stages in their careers who did not leave the labor force.
Many reasons account for this lag. First, women who leave the labor force and later reenter do not build up seniority, which, by itself, often leads to higher wages. Second, women who return to the labor force are less likely to receive on-the-job training to increase their productivity and thereby raise their pay. Third, when women are not in the work force, their job skills may depreciate. Finally, employers may view gaps in work history as a signal that women who leave may do so again. Some employers would therefore hire them for less important, lower-paying jobs to limit the impact of a future decision to leave.
But calculating the cost of intermittent labor force attachment is difficult. Typically, these costs are measured in terms of earnings paths; women who leave the labor force have a lower earnings path than those of women who remain.
This article calculates the cost of taking a break from work in terms of the wage difference between women who work continuously and women who take one or more leaves. We attempt to control for observable and unobservable heterogeneity to uncover temporary and lasting effects a gap in labor force attachment can have on wages.
This excerpt is from an article published in the September 1995 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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