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Human Capital Depreciation

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  • Michael Dinerstein
  • Rigissa Megalokonomou
  • Constantine Yannelis

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%.

Suggested Citation

  • Michael Dinerstein & Rigissa Megalokonomou & Constantine Yannelis, 2020. "Human Capital Depreciation," CESifo Working Paper Series 8614, CESifo.
  • Handle: RePEc:ces:ceswps:_8614
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    Cited by:

    1. Bizopoulou, Aspasia & Megalokonomou, Rigissa & Simion, Stefania, 2022. "Do Second Chances Pay Off? Evidence from a Natural Experiment with Low-Achieving Students," IZA Discussion Papers 15139, Institute of Labor Economics (IZA).
    2. Kedagni, Desire & Krishna, Kala & Megalokonomou, Rigissa & Zhao, Yingyan, 2021. "Does class size matter? How, and at what cost?," European Economic Review, Elsevier, vol. 133(C).
    3. Andrew Yizhou Liu, 2022. "The Minimum Wage And Occupational Mobility," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(2), pages 917-945, May.
    4. Sanchez-Carrera Edgar J. & Ille Sebastian & Travaglini Giuseppe, 2021. "Macrodynamic Modeling of Innovation Equilibria and Traps," The B.E. Journal of Macroeconomics, De Gruyter, vol. 21(2), pages 659-694, June.
    5. Christine Mulhern & Isaac M. Opper, 2021. "Measuring and Summarizing the Multiple Dimensions of Teacher Effectiveness," CESifo Working Paper Series 9263, CESifo.
    6. Aspasia Bizopoulou & Rigissa Megalokonomou & Stefania Simion, 2022. "Do Second Chances Pay Off?," Bristol Economics Discussion Papers 22/762, School of Economics, University of Bristol, UK.
    7. Christopher Neilson & Michael Dinerstein & Sebastián Otero, 2020. "The Equilibrium Effects of Public Provision in Education Markets: Evidence from a Public School Expansion Policy," Working Papers 645, Princeton University, Department of Economics, Industrial Relations Section..
    8. Marwil J. Dávila-Fernández & Serena Sordi & Alessia Cafferata, 2024. "How do you feel about going green? Modelling environmental sentiments in a growing open economy," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 19(4), pages 649-687, October.
    9. Aspasia Bizopoulou & Rigissa Megalokonomou & Stefania Simion, 2023. "Do Second Chances Pay Off? Evidence from a Natural Experiment with Low-Achieving Students," Monash Economics Working Papers 2023-05, Monash University, Department of Economics.

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    More about this item

    Keywords

    human capital; unemployment; teachers;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I29 - Health, Education, and Welfare - - Education - - - Other

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