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Dislocated Worker Human Capital Depreciation and Recovery


  • Kevin Hollenbeck

    () (W.E. Upjohn Institute for Employment Research)

  • Richard J. Willke

    (American Medical Association)


Previous studies have estimated the "human capital depreciation" of women re-entering the work force after voluntary, lengthy interruptions. Those studies have found reduced real wages and furthermore the decrease is positively related to the length of the interruption. Upon re-entry, however, real wages grow rapidly as human capital is restored. This paper develops a model of the wage histories of dislocated workers. Similar to labor force re-entrants, those dislocated workers who become re-employed would experience wages below their final wage prior to dislocation and the decrease should be associated with the length of dislocation. However, the model suggests that since the career disruptions are involuntary and since occupational shifts generally occur, recovery will not be rapid nor complete. The model is estimated with data from a sample of workers in Ohio who had been dislocated and received services under Title III of the Job Training Partnership Act (JTPA). This data set has the limitation that the observations are for workers who chose to receive services, but it also has the advantage that the effects of a variety of training interventions on outcomes can be determined.

Suggested Citation

  • Kevin Hollenbeck & Richard J. Willke, 1990. "Dislocated Worker Human Capital Depreciation and Recovery," Upjohn Working Papers and Journal Articles 90-04, W.E. Upjohn Institute for Employment Research.
  • Handle: RePEc:upj:weupjo:90-04

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    References listed on IDEAS

    1. Lazear, Edward P, 1981. "Agency, Earnings Profiles, Productivity, and Hours Restrictions," American Economic Review, American Economic Association, vol. 71(4), pages 606-620, September.
    2. Daniel S. Hamermesh, 1987. "What Do We Know About Worker Displacement in the U.S.?," NBER Working Papers 2402, National Bureau of Economic Research, Inc.
    3. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-482, June.
    4. Martin Neil Baily, 1974. "Wages and Employment under Uncertain Demand," Review of Economic Studies, Oxford University Press, vol. 41(1), pages 37-50.
    5. Azariadis, Costas, 1975. "Implicit Contracts and Underemployment Equilibria," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1183-1202, December.
    6. Jacob Mincer & Haim Ofek, 1982. "Interrupted Work Careers: Depreciation and Restoration of Human Capital," Journal of Human Resources, University of Wisconsin Press, vol. 17(1), pages 3-24.
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    Cited by:

    1. Dhaoui, Elwardi, 2013. "Human Capital Investment through Education and Training: an Overview," MPRA Paper 63690, University Library of Munich, Germany.

    More about this item


    dislocated; workers; JTPA; Hollenbeck;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers


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