Career interruptions and subsequent earnings: A reexamination using Swedish data

This paper reexamines the link between career interruptions and subsequent wages. Using a rich new Swedish data set, we are able to disaggregate time our of work into several components. In both cross-sectional and panel esti mations, regressing log wages on total time out results in a,negative coeff icient on total time out, which has been interpreted in other studies as ev idence for human capital depreciation. However, we find that different type s of time out have different effects on wages and that these effects vary b y Render. This suggests that human capital depreciation is not the entire e xplanation for the negative effect of career interruptions on subsequent wa ges.