They will 'borrow' nitrogen from the soil in order to break down, the nitrogen is returned when the process is complete. Simple wood shavings or sawdust seem to rot very slowly, this is increased tremendously by mixing the material in with other organic matter. Therefore, adding it to compost is not a bad thing in itself, if you allow the compost time to rot completely before using it (12 months is probably right).
I am only passing on what I have seen myself and read, there are other experts here who will be able to explain it far more technically.