Skill Obsolescence, Vintage Effects and Changing Tasks

Abstract

Human capital is no doubt one of the most important factors for future economic growth and well-being. However, human capital is also prone to becoming obsolete over time. Skills that have been acquired at one point in time may perfectly match the skill requirements at that time but may become obsolete as time goes by. Thus, in the following paper, we study the depreciation processes of the human capital of workers performing different types of tasks with different skill requirements over a period of more than twenty years. We argue that two types of tasks must be distinguished: knowledge-based tasks and experience-based tasks. Knowledge-based tasks demand skills depending on the actual stock of technological knowledge in a society whereas experience-based tasks demand skills depending on personal factors and individual experience values. We show, by applying Mincer regressions on four different cross sections, that the human capital of people performing knowledge-based tasks suffers more from depreciation than the human capital of individuals performing experiencebased tasks.

Skills-displacing technological change and its impact on jobs: challenging technological alarmism?

“…New technologies tend to magnify skill gaps as well by placing a premium on some skills while devaluing and rendering others obsolete (van Loo et al, 2001). Economic skills obsolescence, in particular, is the most relevant form for this study as it captures the impact that technological change may have on depreciating the labour market value of a worker's skillset or of a 'human capital vintage' (Jansen and Backes-Gellner, 2009;De Grip and van Loo, 2002).…”

Skills Mismatch: Concepts, Measurement and Policy Approaches

“…Murillo () finds that workers in Spain with higher education levels are exposed to greater depreciation of human capital. Allen and de Grip () and Janßen and Backes‐Gellner () find that workers are more likely to suffer from skill obsolescence when learning and technical knowledge are key components of the job. Similarly, Cedefop () find greater work complexity is associated with a greater degree of skill obsolescence.…”

Long-term unemployment

“…SOPs include a number of actions that need to be performed during fixed sequences of actions (Kluge, 2014). A distinction given by Jansen and Backes-Gellner (2009) is that knowledge-based tasks suffer from higher depreciation, while experience-based tasks do not.…”