Does time-to-degree matter? The effect of delayed graduation on employment and wages

We use a sample of Italian graduates drawn from the Consorzio AlmaLaurea to study whether the time taken to attain a degree matters for employment and earnings after one, three and five years from graduation. The relevance of this topic arises from the observation that Italian tertiary education sy stem is characterized by an average time to undergraduate degree that is longer than the prescribed period. In addition, this issue is important also because delay in college completion entails a waste of resources both at individual and at collective level, and deprives the economics system of new and up-to-date competencies, as graduates enter the labour market with partially obsolete skills. Our estimates highlight that the probability of finding a job is negatively related to the time taken to graduate only if such delay is greater than three years. Graduates with previous work experiences, then, take on average two months less to be employed and receive higher wages. We also find evidence that students who obtain a degree beyond the minimum period suffer a wage penalty not while entering the labour market, but in the subsequent years (especially 5 years after graduation). This finding suggests that time-to-degree along with work experiences are good proxies for employers to discriminate between the ability of graduates.