A Test of the ‘Lose it or Use It’ Hypothesis in Labour Markets Around the World
IEB Working Paper N. 2015/24
46 Pages Posted: 24 Oct 2015
Date Written: October 7, 2015
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
Suggested Citation: Suggested Citation