Earning or Learning? How Extending Closing Time in the Retail Sector Affects Youth Employment and Education
| DOI | http://doi.org/10.1111/obes.12262 |
| Published date | 01 April 2019 |
| Date | 01 April 2019 |
| Author | Bjarne Str⊘m,Simon S. Bensnes |
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©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd.
OXFORD BULLETIN OF ECONOMICSAND STATISTICS, 81, 2 (2019) 0305–9049
doi: 10.1111/obes.12262
Earning or Learning? How Extending Closing
Time in the Retail Sector Affects Youth Employment
and Education*
Simon S. Bensnes†,‡ and Bjarne Strøm†
†Department of Economics, Norwegian University of Science and Technology, 7491,
Trondheim, Norway
‡Research department, Statistics Norway, 0131, Oslo, Norway (e-mail:
simon.bensnes@ssb.no bjarne.strom@svt.ntnu.no)
Abstract
This paper estimates the causal impact of increased demand for low-skilled workers on
youth employment, and short and long run education. We exploit quasi-experimental de-
mand shifts for retail workers due to changes in allowed opening hours for retail stores
across Norwegian municipalities. We find that relaxed restrictions on opening hours in-
creased employment in the sector and permanently reduced educational attainment for
affected high school students. The results suggest that policies or shocks that increase
demand for low-skilled workers in the short term might have negative long-run effects in
terms of reduced educational attainment.
I. Introduction
Human capital is a key determinant of long-term economic growth and prosperity, as re-
cently demonstrated by Gennaioli et al. (2013). Public debate and academic research in
recent years have focused on the design of public policy to increase the quantity and qual-
ity of schooling and thus to increase human capital. While knowledge on the impact of
public policies on the supply side of the education market is clearly important, the role
of opportunity costs and returns to education in shaping individuals’ demand for educa-
tion and human capital acquisition have received relatively less attention. The effects of
demand-side factors suggested by the human capital model of Becker (1964) can be diffi-
cult to measure but may be as important for human capital acquisition and long-run growth
potential as traditional supply-side policies such as class size reduction and increased ed-
ucational expenditure. The literature shows that local economic shocks have substantial
JEL Classification numbers: I20, I21, J24.
*We thank the editor, three anonymous referees, Nora E. Gordon and Torberg Falch as well as participants at
the workshop ‘Educational Governance and Finance’ 2014 in Oslo, the 27th Annual Conference of the European
Society for Population Economics (ESPE) 2014 in Braga, the 71st Annual Congress of the International Institute of
Public Finance 2015 in Dublin, and seminar participants at the NorwegianUniversity of Science and Technologyand
University of California, Santa Barbara, for helpful discussions and comments on earlier drafts.
300 Bulletin
effects on labour market outcomes, as well as other important economic variables, such
as human capital investment, housing prices and public welfare expenditure. This paper
aims to quantify the effect of changes in local labour market opportunities on human cap-
ital acquisition in school by exploring quasi-experimental variation in job opportunities
originating from changes in the institutional environment facing firms in the retail industry.
Specifically, our quasi-experimental research strategy utilizes a national legislation
change in Norwayin 1985 that brought the regulation of opening hours in the retail industr y
to a more uniform level across the country. The new legislation generally increased the
possibility for retail stores to expand opening hours in the evenings and on Saturdays
by postponing the mandatory shop closing time to later in the day. We show that this
move increased the availability of retail sector jobs and represents a particular demand-
side change that plausibly alters the incentives to invest in schooling, thus affecting the
distribution of human capital across geographical areas and individuals. This result occurs
because retail jobs generally require little or no formal education and are therefore of
particular relevance for youngunskilled people, such as high school dropouts. This situation
was also the case 30 years ago, when the new legislation was introduced, and is a reason
why this particular intervention is relevant for understanding the effects of demand shocks
on the distribution of human capital even today. The importance of the retail sector as an
employer for youngand less educated workers is evident around the world. For example, in
the US, 1/5 of employed persons aged 16–24 are currently employed in the retail sector.1
Over the last 30 years, several countries have removed or eased restrictions on opening
hours in the retail sector on weekdays, Sundays and public holidays. In addition, this topic
is recurring in other countries. Considering this international trend, the results presented
in this paper on potential side effects on educational outcomes also have a clear policy
relevance worldwide.
We contribute to the literature by first investigating the effect of the national legisla-
tion change on local youth employment in retail and on short- and long-run educational
outcomes by exploiting rich census and administrative register data from Norway. While
Lee (2013) finds that the removal of restrictions of Sunday shopping (‘blue laws’) at dif-
ferent points in time across US states lowered educational attainment and increased retail
employment, we exploit the heterogeneity in opening hour regulations across municipal-
ities in the prereform period (before 1985) as the identifying source of variation; hence,
we circumvent potential endogeneity problems in studies using intertemporal variation in
legislation across states. The legislationwe study here affected opening hours on weekdays
as opposed to Sundays, and we therefore analyse a more general intervention than in the
previous literature on the removal of ‘blue laws’. By focusing on the differential effect
of the national policy change on different municipalities, we cannot evaluate nation-wide
effects. Rather, we analyze how retail employment opportunities for young people and
subsequent human capital investments differ between municipalities with large increases
in potential opening hours relative to municipalities with little or no change.
Wealso contribute to the literature by investigating to what extent effectson educational
outcomes differ across students with different family backgrounds and across gender.
While we do not study intergenerational mobility directly in this paper, the results on
1Bureau of Labor Statistics (2017).
©2018 The Department of Economics, University of Oxford and JohnWiley & Sons Ltd
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