The Timing of Careers and Human Capital Depreciation

Abstract

This paper explores the short and long run effects of career interruptions on wages for youngskilled workers in West Germany. The analysis distinguishes four types of careerinterruptions: unemployment, parental leave for female workers, national service for maleworkers and other non-work spells. We adopt the human capital model by Mincer andPolachek (1974) with homogenous human capital and test whether net depreciation is equalacross types of employment interruptions, and equal in the short and in the long run. Themain findings are that timing effects seem important and net depreciation differs across typesof interruptions.

Keywords: human capital depreciation, wage determination, unemployment

JEL Classification: J16, J3, J7