No. 4/2015: Earning or Learning? The impact of relaxing shop opening hours restrictions on youth employment, education and earnings

Abstract

Many countries have recently removed or relaxed restrictions on shop opening hours. If deregulation increases job opportunities for unskilled young people it may affect incentives to make education investments. This paper studies the impact of deregulation of shop opening hours on youth employment, schooling decisions and subsequent earnings. We use a national reform in shop opening hour restrictions in Norway in 1985 to provide quasiexperimental evidence by exploiting that the bite of the reform varied considerably across municipalities. We find that increased potential opening hours substantially reduced the average probability to graduate from high school and especially so for the group of students with less educated parents. These students also experienced a reduction in completed years of education and some earnings reduction in adulthood. Combined with the finding that deregulation increased employment of 16-24 year old workers in the retail sector by 12% on average, the evidence is consistent with the view that opportunity cost of study time is an important determinant of human capital investments.