The Timing of Careers and Human Capital Depreciation

Abstract

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

Keywords: Wage Determination, Human Capital Depreciation, Unemployment

JEL Classification: J16, J3, J7