Measuring the Rate of Return to Interrupted Schooling

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Abstract
The most widely followed technique to estimate the rate of return to a year of schooling was provided by Mincer (1974) . This paper extends Mincer's semilog wage regression method to include those who interrupted their schooling with years of work. Schooling and the duration of the interruption interact to create nonlinearities in the rate of return to schooling. The proposed method is then applied to both Vietnam era G.I. students and civilian interrupters. It is found that interrupters earn substantially the same rate of return as the rate of return to uninterrupted schooling at the same level of schooling. G.I. students earned slightly higher rates of return to their interrupted schooling, but their accumulated work experience was not valued highly in the labor market.

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