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How much does a year off cost? Estimating the wage effects of employment breaks and part-time periods

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  • Beblo, Miriam
  • Wolf, Elke

Abstract

Discontinuities in the employment profile are supposed to cause wage cuts since they imply an interruption in the accumulation of human capital as well as a depreciation of the human capital stock built up in the past. In this paper, we estimate the return to effective experience, taking into account both the timing and the duration of non-work and part-time employment spells. Estimation results for German women suggest that deviations from full-time employment are associated with significant wage cuts owing to the depreciation of human capital. Postponing the discontinuity leads to a further fall of the wage rate. Controlling for individual heterogeneity with respect to industry sector and job position decreases the estimated depreciation rates. This we interpret as an indication for segregation in the labor market. We conclude that traditional wage estimations that do not control for depreciation underestimate the return to effective experience.

Suggested Citation

  • Beblo, Miriam & Wolf, Elke, 2000. "How much does a year off cost? Estimating the wage effects of employment breaks and part-time periods," ZEW Discussion Papers 00-69, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5351
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    Cited by:

    1. McFarland Amanda & Pearlman Sarah, 2020. "Knowledge Obsolescence and Women’s Occupational Sorting: New Evidence from Citation Data," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-14, January.
    2. Christina Boll, 2011. "Mind the gap—German motherhood risks in figures and game theory issues," International Economics and Economic Policy, Springer, vol. 8(4), pages 363-382, December.
    3. Gafni Dalit & Siniver Erez, 2015. "Is There a Motherhood Wage Penalty for Highly Skilled Women?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(3), pages 1353-1380, July.
    4. Lauk, Martina & Meyer, Susanne, 2005. "Women, Men and Housework Time Allocation: Theory and Empirical Results," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 37209, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    5. Wolf, Elke, 2001. "Comparing the part-time wage gap in Germany and the Netherlands," ZEW Discussion Papers 01-18, ZEW - Leibniz Centre for European Economic Research.
    6. Görlich, D. & de Grip, A., 2007. "Human capital depreciation during family-related career interruptions in male and female occupations," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    7. Felfe, Christina, 2012. "The motherhood wage gap: What about job amenities?," Labour Economics, Elsevier, vol. 19(1), pages 59-67.
    8. Christina Felfe, 2008. "The Child Penalty - What about Job Amenities?," University of St. Gallen Department of Economics working paper series 2008 2008-22, Department of Economics, University of St. Gallen.
    9. Jan Ondrich & Katharina C. Spieß & Qing Yang, 2002. "The Effect of Maternity Leave on Women's Pay in Germany 1984-1994," Discussion Papers of DIW Berlin 289, DIW Berlin, German Institute for Economic Research.
    10. Gafni Dalit & Siniver Erez, 2018. "The Motherhood Penalty: Is It a Wage-Dependent Family Decision?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 18(4), pages 1-18, October.
    11. García-Morán, Eva & Kuehn, Zoe, 2023. "Till mess do us part: Married women's market hours, home production, and divorce," MPRA Paper 119324, University Library of Munich, Germany.
    12. Beblo, Miriam & Wolf, Elke, 2002. "Wage Penalties for Career Interruptions: An Empirical Analysis for West Germany," ZEW Discussion Papers 02-45, ZEW - Leibniz Centre for European Economic Research.
    13. Müller, Kathrin, 2009. "Employment growth in newly established firms: is there evidence for academic entrepreneur's human capital depreciation?," ZEW Discussion Papers 09-050, ZEW - Leibniz Centre for European Economic Research.
    14. Lauk, Martina & Meyer, Susanne, 2004. "Frauen, Männer und die Hausarbeit Hintergründe der Zeitverwendung in Theorie und Empirie," Darmstadt Discussion Papers in Economics 125, Darmstadt University of Technology, Department of Law and Economics.
    15. Lauk, Martina & Meyer, Susanne, 2005. "Women, Men and Housework Time Allocation: Theory and Empirical Results," Darmstadt Discussion Papers in Economics 143, Darmstadt University of Technology, Department of Law and Economics.
    16. Driouchi, Ahmed, 2015. "Threats to Skills of Unemployed Qualified Labor in Arab Economies," MPRA Paper 67361, University Library of Munich, Germany.
    17. Kuhlenkasper, Torben & Kauermann, Göran, 2010. "Female wage profiles: An additive mixed model approach to employment breaks due to childcare," HWWI Research Papers 2-18, Hamburg Institute of International Economics (HWWI).
    18. Miriam Beblo & Elke Wolf, 2002. "Die Folgekosten von Erwerbsunterbrechungen," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 71(1), pages 83-94.
    19. Kleinert, Corinna, 2011. "West/Ost-Vergleich: Ostdeutsche Frauen häufiger in Führungspositionen (West-east comparison - East German women more often in leading positions)," IAB-Kurzbericht 201103, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    20. Driouchi, Ahmed, 2014. "Unemployment Persistence & Risks of Skill Obsolescence in Arab Countries," MPRA Paper 53793, University Library of Munich, Germany.
    21. Torbjørn Hægeland, 2001. "Changing Returns to Education Across Cohorts: Selection, School System or Skills Obsolescence?," Discussion Papers 302, Statistics Norway, Research Department.
    22. Michela Bia & German Blanco & Marie Valentova, 2021. "The Causal Impact of Taking Parental Leave on Wages: Evidence from 2005 to 2015," LISER Working Paper Series 2021-08, Luxembourg Institute of Socio-Economic Research (LISER).

    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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