Working Paper: NBER ID: w31120
Authors: Jonathan P. Cohen; Andrew C. Johnston; Attila S. Lindner
Abstract: We use a panel of survey responses linked to administrative data in Germany to measure the depreciation of skills while workers are unemployed. Both the reemployment hazard rate and reemployment earnings steadily fall with unemployment duration, and indicators of depression and loneliness rise substantially. Despite this, we find no decline in a wide range of cognitive and noncognitive skills while workers remain unemployed. We find the same pattern in a panel of American workers. The results imply that skill depreciation in general human capital is unlikely to be a major explanation for duration dependence.
Keywords: unemployment; skill depreciation; panel data; cognitive skills; noncognitive skills
JEL Codes: I32; J24; J6; J60; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| unemployment duration (J64) | cognitive skills (G53) |
| unemployment duration (J64) | noncognitive skills (G53) |
| unemployment duration (J64) | reemployment hazard rate (J63) |
| unemployment duration (J64) | reemployment earnings (J68) |
| noncognitive skills (G53) | reemployment earnings (J68) |
| cognitive skills (G53) | reemployment earnings (J68) |