The data set is very similar to that used in GN, since the goal of this paper is to expand the empirical analysis in that paper. This section provides an overview. The NLSY is used for the years 1979-1992, providing comprehensive labor market, schooling, and test score information on a large cohort near or at the beginning of their school-to-work transition, and later in their careers as more mature adults. The sample is first restricted to individuals who were neither in the military subsample nor reported any military duty through 1992. Next, a number of restrictions on the sample are imposed to focus on individuals’ first years in the labor market. A window of five years is used, based on the presumption that this window is sufficiently long to observe many individuals’ transitions from their earliest entrance into the labor market into somewhat steadier employment (Osterman, 1980).
The tradeoff is that the longer the window used, the smaller the sample gets, as it becomes more likely that a non-interview is encountered, or that some of the questions change and become unusable. Because of data constraints, and because it was important to have a substantial amount of elapsed time between this early labor market period and adult labor market outcomes, attention was restricted to five-year windows ending in 1986. This implies that the windows ranged from 1979-1983 to 1982-1986. credit
Dating labor market entry is ambiguous, because some individuals acquire work experience during school and others go back to school after working. A natural procedure is to regard entry into the labor market as the first year in which individuals are observed ’’permanently” out of school-i.e., out of school for the remaining observations in the NLSY. However, because school-to-work transitions may involve course work at community or other two-year colleges, it seems unduly restrictive to limit the analysis to the period after which individuals report no additional schooling. Thus, the date of entrance into the labor market was defined as the first year in which individuals no longer report schooling other than at two-year colleges.