Human Capital Depreciation and Returns to Experience

Michael Dinerstein, Rigissa Megalokonomou and Constantine Yannelis

No 27925, NBER Working Papers from National Bureau of Economic Research, Inc

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 0.05 standard deviations. Using a simple production model, we estimate a skill depreciation rate of 4.3% and experience returns of 6.8%.

JEL-codes: H52 I26 J24 (search for similar items in EconPapers)
Date: 2020-10
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Citations: View citations in EconPapers (9)

Published as Michael Dinerstein & Rigissa Megalokonomou & Constantine Yannelis, 2022. "Human Capital Depreciation and Returns to Experience," American Economic Review, vol 112(11), pages 3725-3762.

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