Human capital obsolescence: some evidence for Spain

Purpose – The main objective of this paper is to analyse the link between human capital depreciation and the educational level of Spanish salaried workers. Design/methodology/approach – Wage equations are estimated by sector and occupation, following the empirical framework proposed by Neuman and Weiss. Data in this study refer to the Spanish labour market, using two cross-sectional employee-firm matched data. Findings – The estimates provided in this paper suggest that human capital depreciation rates are not homogeneous for the whole sample; in contrast, they vary across educational levels, being greater as the workers' school attainment increases. Research limitations/implications – The main restriction of the paper is the limited availability of quality longitudinal data to estimate human capital depreciation. Practical implications – Knowledge acquired by workers may quickly become obsolete in a context of technological change. Thus, the paper's main findings support the need for ongoing training programs to update workers' skills to changing market requirements. Originality/value – The added value of this paper is two-fold. On the one hand, returns to education and human capital depreciation for the Spanish labour force are estimated using a pseudo-panel created from two cross-sectional data bases. On the other hand, earnings equations are estimated by sector and occupation in order to calculate human capital depreciation rates; this procedure allows the authors to take into account the worker's occupation and their level of education as well as technological differences associated with their job.