We provide the first evidence on how workers invest in human capital after losing ability. Using quasi-random work accidents in Danish administrative data, we find that workers enroll in bachelor’s programs after physical injuries, pursuing degrees that build on their work experiences and provide pathways to cognitive occupations. Exploiting differences in eligibility driven by prior vocational training, we find that higher education moves injured workers from disability benefits to full-time employment. Reskilled workers earn 25% more than before their injuries and do not end up on antidepressants. Without higher education, by contrast, these workers end up entirely on disability benefits and often resort to taking antidepressants. Reskilling subsidies for injured workers pay for themselves four times over, and current rates of reskilling are substantially below the social optimum, especially for middle-aged workers.

More on this topic

BFI Working Paper·Nov 14, 2024

Assortative Matching and Wages: The Role of Selection

Katarína Borovičková and Robert Shimer
Topics: Employment & Wages
BFI Working Paper·Sep 24, 2024

Moving to Opportunity, Together

Seema Jayachandran, Lea Nassal, Matthew J. Notowidigdo, Marie Paul, Heather Sarsons, and Elin Sundberg
Topics: Employment & Wages
BFI Working Paper·Sep 16, 2024

Why Do Workers Dislike Inflation? Wage Erosion and Conflict Costs

Joao Guerreiro, Jonathon Hazell, Chen Lian, and Christina Patterson
Topics: Employment & Wages