Human Capital Depreciation

104 Pages Posted: 14 Oct 2020

See all articles by Michael Dinerstein

Michael Dinerstein

University of Chicago

Rigissa Megalokonomou

University of Queensland - School of Economics

Constantine Yannelis

University of Chicago, Booth School of Business, Finance, Students

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Date Written: October 12, 2020

Abstract

Human capital can depreciate if skills are unused. But estimating human capital depreciation is challenging, as worker skills are difficult to measure and less productive workers are more likely to spend time in non-employment. We overcome these challenges with new administrative data on teachers’ assignments and their students’ outcomes, and quasi- random variation from the teacher assignment process in Greece. We find significant losses to output, as a one-year increase in time without formal employment lowers students’ test scores by 0.09 standard deviations. Using a simple production model, we estimate a skill depreciation rate of 4.3% and experience returns of 6.8%.

JEL Classification: H52,I26,J24

Suggested Citation

Dinerstein, Michael and Megalokonomou, Rigissa and Yannelis, Constantine, Human Capital Depreciation (October 12, 2020). University of Chicago, Becker Friedman Institute for Economics Working Paper No. 2020-146, Available at SSRN: https://ssrn.com/abstract=3710039 or http://dx.doi.org/10.2139/ssrn.3710039

Michael Dinerstein (Contact Author)

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

HOME PAGE: http://https://sites.google.com/site/michaeldinerstein/

Rigissa Megalokonomou

University of Queensland - School of Economics ( email )

Brisbane, QLD 4072
Australia

Constantine Yannelis

University of Chicago, Booth School of Business, Finance, Students ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

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