Chapter 3
Variables

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3.1 Educational pathway

The main independent variable in this analysis is the educational pathway youth take to the labour market after leaving school on a full-time basis. All five cycles are used in order to gain as complete a picture as possible; thus, December 2007 is the last date educational status is measured. Thirteen possible educational paths were measured, taking into account whether the respondent had ever dropped out of high school (and never returned); whether the respondent took time off after finishing high school and entering a post-secondary program; and the highest level of completed education. The thirteen paths are divided into three major sections: (1) no post-secondary education (PSE), (2) direct route to post-secondary education, and (3) indirect route to post-secondary education.

The paths included in the no post-secondary education group are youth who had ever dropped out of high school and never returned to obtain their high school diploma or any other type of training (Path 1 — High school droppers); youth who received a 'second chance' since they dropped out of high school, but then returned to obtain a high school diploma (Path 2 — 2nd chance at High school, no post-secondary education); and individuals whose highest level of education by December 2007 was a high school diploma only (Path 3 — High school graduate only). This latter group had never dropped out of high school.

Group 2 includes youth who had never dropped out of high school and who went directly (within four months¹) to PSE following high school graduation. Five pathways are within this category: Path 4 — youth who started a post-secondary program but left prior to finishing (post-secondary education leavers); Path 5 – youth who obtained a trade / other type of diploma;² Path 6 — those who obtained a college diploma or a college diploma followed by a university degree. The final path (5) in this group includes youth with a university degree who went directly to university following graduation from high school (Path 7). This path is used as the reference category in all analyses, because it is the most common path within this sample; in addition, the analysis finds that this path affords youth the best chances in the labour market.

Group 3 involves youth who took a non-linear route through school. Five paths are in this group: Path 8 — youth who at one point had dropped out of high school, but then returned to school and obtained their high school diploma before going on to some form of post-secondary training (2nd chance at high school, some post-secondary education). In this path, about a third never obtained a post-secondary education credential. The remaining four paths include youth who never dropped out of high school but who then delayed (more than four months) starting a post-secondary education program after high school completion (Path 9). These 'gapper' paths include post-secondary education leavers (Path 10), those with a trade or other type of diploma (Path 11), those with a college diploma (Path 12) and those with at least a bachelor's degree Path 13).³

3.2 Labour market outcomes

Labour market outcomes are linked with the date respondents said they were last in school on a full-time basis (which is known in monthly increments). For example, Cycle 1 was carried out in 2000 but labour market details were reported for 1999. Similarly for Cycle 2, which was carried out in 2002, 2001 labour market information is known. Therefore, the successive cycles of Youth in Transition Survey (YITS) up to Cycle 5 provide labour market information for 1999, 2001, 2003, 2005 and 2007. Specifically, the design is as follows. Young adults who left school prior to and including December 2002 were linked to specific labour market information depending on the number of years from their school leaving date. For example, to create Time 1 labour market variables (1 or 2 years after), respondents who left school in 1997 and 1998 were assigned 1999 earnings or employment status from Cycle 1; those who left school in 1999 and 2000 were assigned Cycle 2 labour market details from 2001, and those who left school in 2001 and 2002 were assigned Cycle 3 information from 2003. To create Time 2 (5 or 6 years after) measures respondents who left in 1997/1998, 1999/2000, or 2001/2002 were assigned labour market characteristics in 2003, 2005 or 2007, respectively.

3.2.1 Full-year employment

The first labour market outcome examined is employment. Specifically, it is a dichotomous measure indicating whether the respondent worked a full year (12 months) during the reference period, that is, for a full year at Time 1 (1 or 2 years out of school) or full year at Time 2 (5 or 6 years out of school). Full-year employment was used in order to assess employment stability after leaving school, since those employed for 12 months are likely to be in fairly stable jobs, one possible indicator of success in the labour market.

3.2.2 Earnings

The second dependent variable is annual earnings/wages from all sources. A great deal of prior research uses annual earnings as an important labour market outcome (see Betts, Ferrall, and Finnie 2007; Finnie 1999; Green and Riddell 2001; Walters 2004). Finnie (1999: 16) suggests that annual earnings represent a "rate of pay (as opposed to actual earnings received) which automatically adjusts for irregular work patterns over the course of the year." This approach therefore suits the purposes of the current paper over weekly or hourly earnings as the goal is to assess stability of earnings.

Similar to employment, earnings are also measured at two points in time, at Time 1 (1 or 2 years out of school) and at Time 2 (5 or 6 years out of school). In order to compare earnings across multiple years, earnings in each year were indexed to 2006 using the Consumer Price Index. Also, to reduce skewness in the distribution, logged earnings are used in all analyses.

3.2 Controls

Based on a review of the literature on education and labour market outcomes, factors other than educational pathway were identified and taken into account in the analytical models. These control measures can be grouped into three major themes: (1) background and demographic, (2) high school factors, and (3) contemporaneous factors present during the year when the labour market outcome is measured. Three background measures are included: sex (equals 1 if the respondent was female, 0 if male); place of birth (Canadian born equals 1, all else equal 0); and parental education (the level of education of either parent), which is split into less than high school (reference category), high school only, some post-secondary education and post-secondary education graduate. During high school, two important factors emerge that have an impact on both educational attainment and future earnings: working during high school and average marks. Number of hours worked per week in high school is separated into four categories: no hours (reference category); one to less than 10 hours; 10 to less than 20 hours; and more than 20 hours per week. Similarly, average academic marks in the last year of high school is split into four broad categories: high, medium high (reference category), medium and low, which corresponds to averages of 80% to 100%, 70% to 79%, 60% to 69% and 59% or less, respectively.

Last, contemporaneous factors measured during the same year as labour market outcomes are considered. Specifically, seven different factors known to impact labour market outcomes are used: age (measured in months); residential mobility (moving from province of high school after high school graduation); presence of child(ren) in the household; marital status (living married or common law versus all else); presence of a long-term mental / physical condition limiting work; province of residence ((split into Atlantic provinces, Quebec, Ontario (reference category) and West)); and the population size of the community in which the respondent lived. For the earnings regressions, one additional control is utilized — the number of months worked during the year. This last covariate is important since more highly educated workers tend to work more weeks per year; therefore, not controlling for weeks worked would lead to overstating the education effects (Riddell and Sweetman 2000).

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Note

1. Four months is used as the cut-off in determining whether a respondent delayed entering a post-secondary education program because a typical direct pathway between high school and start of post-secondary education is in the autumn following high school graduation in the spring, or about 4 months.
2. Unfortunately due to small sample size, trade certificates (registered apprenticeship programs) had to be combined with other types of diplomas such as professional licenses for accounting, banking and insurance, as well as certificates from private business schools, and attestation of vocational specialization. As a result, the independent impact that having a trade certificate has on early labour market outcomes cannot be assessed.
3. A pathway for Gappers who obtained a college diploma prior to a university degree had to be combined within the Gapper-University path due to small sample size.