Anders Humlum, University of Chicago

"Changing Tracks: Human Capital Investment after Loss of Earning Ability"

Abstract

We provide the first evidence on how workers invest in human capital after losing ability. Studying quasi-random work accidents using Danish administrative data, we find that workers take up higher education after physical injuries. Workers enroll in bachelor's programs that build on their work experiences and provide pathways to cognitive occupations. Yet, most injured workers do not invest in human capital, and we cast light on the underlying causes. Exploiting differences in eligibility driven by prior vocational training, we find that human capital investment moves injured workers from disability benefits to full-time employment, earning 25 percent more than before their injuries. Higher education for injured workers can generate net social returns of 500 percent.

Joint with Pernille P. Jørgensen and Jakob R. Munch

Contact person: Kristoffer Balle Hvidberg