American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Skill Depreciation during Unemployment: Evidence from Panel Data
American Economic Journal: Applied Economics
vol. 17,
no. 3, July 2025
(pp. 208–35)
Abstract
We examine the depreciation of skills among unemployed German workers using a panel of skill measures linked to administrative data. Both the reemployment hazard and reemployment earnings steadily decline with unemployment duration. Indicators of depression and loneliness also rise substantially. However, 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 observed duration dependence in reemployment outcomes.Citation
Cohen, Jonathan, Andrew C. Johnston, and Attila Lindner. 2025. "Skill Depreciation during Unemployment: Evidence from Panel Data." American Economic Journal: Applied Economics 17 (3): 208–35. DOI: 10.1257/app.20230195Additional Materials
JEL Classification
- E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
- E32 Business Fluctuations; Cycles
- J22 Time Allocation and Labor Supply
- J24 Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 Wage Level and Structure; Wage Differentials
- J64 Unemployment: Models, Duration, Incidence, and Job Search