Depreciation of human capital: a sectoral analysis in OECD countries

Depreciation of human capital: a sectoral analysis in OECD countries PurposeThe purpose of this paper is to investigate which sectors are more vulnerable to human capital depreciation, with an emphasis on potential differences in skills and in ICT intensities.Design/methodology/approachThe authors estimate an extended Mincerian earnings equation based on Neuman and Weiss’s (1995) model using the EU-KLEMS international database for 15 sectors for the period from 1980 to 2005. The authors also test structural ruptures in earnings and human capital depreciation in the labor market per decade controlling by technological intensity.FindingsHuman capital depreciation ranges from 1 to 6 percent. It is mainly significant in skill-intensive sectors regardless of the sector’s technological intensity. The analysis of structural breaks shows that human capital value indeed changed from decade to decade. It even appreciated in low skill-intensive sectors in the 1980s and in the high skill-intensive during the 1990s. Appreciation though, was mainly skill-biased.Research limitations/implicationsInformation about on-the-job-training and non-cognitive skills that can also affect human capital depreciation are not included due to lack of data.Practical implicationsTo prevent human capital from depreciating in particular sectors and periods educational systems should provide the tools for ongoing lifelong learning at all skills levels. Education is subject to dynamic effects that should be addressed to increase the potential benefits of technological change.Originality/valueFirst, instead of using cross-section analysis which is considered to be a pitfall in studying the depreciation of knowledge, the authors observe its dynamic on a longitudinal basis. Second, the international macro-sectoral approach goes beyond limited micro-sectoral analysis in certain countries. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Depreciation of human capital: a sectoral analysis in OECD countries

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0143-7720
DOI
10.1108/IJM-07-2018-0207
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to investigate which sectors are more vulnerable to human capital depreciation, with an emphasis on potential differences in skills and in ICT intensities.Design/methodology/approachThe authors estimate an extended Mincerian earnings equation based on Neuman and Weiss’s (1995) model using the EU-KLEMS international database for 15 sectors for the period from 1980 to 2005. The authors also test structural ruptures in earnings and human capital depreciation in the labor market per decade controlling by technological intensity.FindingsHuman capital depreciation ranges from 1 to 6 percent. It is mainly significant in skill-intensive sectors regardless of the sector’s technological intensity. The analysis of structural breaks shows that human capital value indeed changed from decade to decade. It even appreciated in low skill-intensive sectors in the 1980s and in the high skill-intensive during the 1990s. Appreciation though, was mainly skill-biased.Research limitations/implicationsInformation about on-the-job-training and non-cognitive skills that can also affect human capital depreciation are not included due to lack of data.Practical implicationsTo prevent human capital from depreciating in particular sectors and periods educational systems should provide the tools for ongoing lifelong learning at all skills levels. Education is subject to dynamic effects that should be addressed to increase the potential benefits of technological change.Originality/valueFirst, instead of using cross-section analysis which is considered to be a pitfall in studying the depreciation of knowledge, the authors observe its dynamic on a longitudinal basis. Second, the international macro-sectoral approach goes beyond limited micro-sectoral analysis in certain countries.

Journal

International Journal of ManpowerEmerald Publishing

Published: Oct 7, 2019

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