Does skill obsolescence increase the risk of employment loss?

Jim Allen and Andries de Grip

Applied Economics, 2012, vol. 44, issue 25, 3237-3245

Abstract: In this article, we analyse whether technological change induces skill obsolescence and early labour market exit, and to what extent training participation and on the job learning reduce these risks. Using panel data on older workers, we find that workers report skill obsolescence more often when learning is a structural characteristic of the job. This perceived skill obsolescence is not related to a higher probability of losing employment. Instead, workers who experience skill obsolescence appear to learn more on the job and participate more often in training, which decreases the risk of losing employment. These results are consistent with the dynamic model of skill obsolescence and employment loss we develop in this article. Moreover, we find that when workers with long job tenures decrease their training participation, this is an early indicator of future job loss.

Date: 2012
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DOI: 10.1080/00036846.2011.570727

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