Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data
This paper reexamines the link between career interruptions and subsequent wages. Using a rich new Swedish data set, we are able to disaggregate time out of work into several components. In both cross-sectional and panel estimations, regressing log wages on total time out results in a negative coefficient on total time out, which has been interpreted in other studies as evidence for human capital depreciation. However, we find that different types of time out have different effects on wages and that these effects vary by gender. This suggests that human capital depreciation is not the entire explanation for the negative effect of career interruptions on subsequent wages.
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