Human capital depreciation and education level
Abstract
Purpose
The purpose of this paper is to investigate the link between human capital depreciation and education level, with an emphasis on potential differences between general and specific education.
Design/methodology/approach
A nonlinear wage equation, based on Arrazola and de Hevia's (2004) model, is estimated using data from the Swiss Labor Force Survey (SLFS) over the period 1998-2008, in order to estimate a human capital depreciation rate for several education groups.
Findings
Human capital depreciation is significantly related to education type. Academic (“concept-based”) education protects workers more effectively against depreciation than vocational (“skill-specific”) education.
Research limitations/implications
The SLFS survey is a rotating panel of five years and no retrospective data on earnings and employment are provided. A study of lifecycle earnings like the one proposed here would clearly benefit from a longer individual observation period.
Practical implications
In all educational tracks, even vocational ones, a substantial time share should be devoted to the acquisition of general skills. Moreover, it is necessary to manage lifelong learning carefully in order not to waste initial investments in education.
Originality/value
Instead of using a purely quantitative approach to separate workers by years of education, qualitative aspects of educational system are taken into account. Taking advantage of the Swiss educational system characteristics, workers are separated on the basis of their education type. Workers with vocational education (apprenticeships, professional and technical schools and universities of applied sciences) are assumed to possess a relatively specific human capital, compared to those with academic education (high schools and universities).
Keywords
Acknowledgements
This research was partly conducted while the author was at the Department of Economics of the University of Geneva. Financial support from the Swiss Leading House “Economics of Education” (University of Geneva) is gratefully acknowledged. Earlier versions of the paper were presented at the Annual Conference of the European Association of Labour Economists (EALE), Amsterdam (Netherlands), September 2008, and at the annual conference of the Society of Labor Economists (SOLE), Boston (USA), May 2009. The author thanks Ulrich Blum, Martin Carnoy, Christian Dustmann, Jean-Marc Falter, Giovanni Ferro Luzzi, Yves Flückiger, Jennifer Hunt, Philippe Méhaut, Marcelo Olarreaga, José Ramirez, and Éric Verdier for valuable comments that led to improvements of the paper. The author also thanks the referees of the International Journal of Manpower. Every remaining error is the authors’.
Citation
Weber, S. (2014), "Human capital depreciation and education level", International Journal of Manpower, Vol. 35 No. 5, pp. 613-642. https://doi.org/10.1108/IJM-05-2014-0122
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited