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Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data

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Listed:
  • Albrecht, James W.
  • Edin, Per-Anders
  • Sundström, Marianne
  • Vroman, Susan B.

Abstract

This paper reexamines the link between career interruptions and subsequent wages. Using a rich new Swedish dataset, we are able to disaggregate time out of work into several components. Regressing log wages on aggregate total time out leads to the standard result, i.e., a negative coefficient on time out. However, we find that different types of time out have different effects on wages and that these effects vary by gender. This casts doubt on the usual human capital depreciation interpretation that has been placed on the negative coefficient of total time out in the wage equation. We propose a simple signaling model as an alternative interpretation.

Suggested Citation

  • Albrecht, James W. & Edin, Per-Anders & Sundström, Marianne & Vroman, Susan B., 1996. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Working Paper Series 1996:23, Uppsala University, Department of Economics.
  • Handle: RePEc:hhs:uunewp:1996_023
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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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