A Test of the ‘Lose it or Use It’ Hypothesis in Labour Markets Around the World

Abstract

This paper investigates skills and the use of skills at work in 21 OECD countries. The skills included in the analysis are literacy, numeracy and problem-solving. The paper investigates the conjecture that the deterioration of skills with age might be more pronounced in occupations with a limited use of skills than in occupations with more intensive use of these skills – an implication of the ‘use it or lose it’ hypothesis. I look at the development over age of both measured skills and the use of skills at work in two aggregate categories of occupations: a group of high-skilled workers (ISCO major occupations from 0 to 4) and a group of low-skilled workers (ISCO major occupations from 5 to 9). High-skilled workers have higher measured skills than low-skilled workers and high-skilled workers use skills more at work than low-skilled workers. Measured skills decline from the age of 35 both for high- and low-skilled workers at about the same pace. The use of skills at work also declines from the age of 35 for both high-skilled workers and low-skilled workers at about the same pace, and at about the same rate as measured skills. The evidence does not support the ‘use it or lose it’ hypothesis.

Keywords: Skills, occupations, ageing

JEL Classification: J14