() and Magnus Gustavsson
Per-Anders Edin: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Magnus Gustavsson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Abstract: This paper investigates the role of skill depreciation in the relationship between work interruptions and subsequent wages. Using a unique longitudinal dataset, the Swedish part of the International Adult Literacy Survey, we are able to analyze changes in literacy skills for individuals as a function of time out of work. In general, we find statistically strong evidence on a negative relationship between work interruptions and skills. Our analysis suggests that depreciation of general (literacy) skills is economically significant. Our estimates imply that a full year of non-employment is associated with skill losses that are equivalent to moving 5 percentiles down the skill distribution.
29 pages, September 28, 2004
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