FINANCIAL CONSEQUENCES OF CAREER BREAKS A LATENT GROWTH MODEL ON REGISTER DATA Auteur(s): Frans Dorien, Dimitri Mortelmans en Caroline Masquillier
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Abstract
This study examines the financial consequences of career breaks. Using a sample of administrative data with information on individuals living in Flanders, the wage differentials after re-entry on the labour market are analysed. The data span the period from the second quarter of 1998 to the fourth quarter of 2006. A group of people with a career break and a control group of people without a career break were compared. In each group there were 90 414 individuals. For the analyses, additional selections were made after the initial sampling in order to control for sample selectivity. The study used multilevel models for change – also known as latent growth models – to analyse the data. The results suggest that there are significant initial wage differences after the break between people with a career break compared to people without a break in disadvantage of the first group. The wage differentials between men were greater than those between women. Moreover, a significant additional wage growth was found after the break for women but not for men. This could indicate that men are stigmatized more on the labour market for taking a career break than women. These results are explored in more depth by introducing the type of career break for men and women in the models. After controlling for important covariates (i.e. the number of children, age of the youngest child, age and income of 1998), there were significant differences according to type of career break (full-time (public/private), part-time (public/private), thematic leaves). Men and women with a full-time break had significant lower wages than men and women without a break respectively. A possible explanation is that in this type of break there is a total disconnection of the job, which can send a stronger signal to employers that these people are less committed than people who take part-time breaks or thematic leaves. Nevertheless, women with a part-time break, either public or private, also experience lower wages than women with thematic leaves and women without a break. This could be due to the fact that it is common for women to take such a thematic leave, and it therefore does not send a signal of lower job commitment. The wages of men with a thematic leave did not significantly differ from men without a break. An explanation could be that such leaves are becoming more and more socially acceptable and will consequently not lead to significant wage differentials. From these analyses, it is not clear what the exact consequences are of taking a career break. It is only possible to examine the initial wage differentials after the break at re-entry to the labour market and the subsequent differentials in wage growth from 2003 until 2006. There might also be selection-effects – like limited job ambition – that might underlie the wage differentials found in the study. Even though controlling for these selection effects was tried by including income before the break, it is not possible to fully grab all possible selection effects with this data.
Key words: Career breaks; latent growth model; financial consequences; longitudinal modelling; gender differences
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Study objectives
The career break scheme enjoys a great popularity and the number of people entering the system of career breaks still increases rapidly every year in Belgium. Over the years, the number of people doubled from 111 994 in 2001 to 223 319 in 2007, up to a record of 261 059 in 2010 (RVA, 2010). Despite this popularity, little is in fact known about the consequences of the Career Break Scheme. In international research, it has been shown that employees who interrupt their careers will be penalized on the labour market. Studies have shown the negative effects of taking a career break on career development in terms of fewer promotions and wage depreciation compared to individuals with continuous working patterns. However, it is still unclear in the literature how much wage loss can be expected. Since career interrupters might not always be aware of these negative effects before taking a career break, it is important to investigate the effects of career breaks. In this study, the administrative data of the datawarehouse Labour Market and Social Security was used to estimate the wage differentials after a career break. Persons taking a career break were compared to similar persons without a career break. The wage differentials after the break were looked at separately for men and women because they are expected to experience different effects.
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