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This paper provides more insight into the assumption of human capital theory that the productivity of job-related training is driven by the improvement of workers’ skills. We analyze the extent to which training and informal learning on the job are related to employee skill development and consider the heterogeneity of this relationship with respect to workers’ skill mismatch at job entry. Using data from the 2014 European Skills and Jobs Survey, we find – as assumed by human capital theory – that employees who participated in training or informal learning show greater improvement of their skills than those who did not. The contribution of informal learning to employee skill development appears to be larger than that of training participation. Nevertheless, both forms of learning are shown to be complementary. This complementarity between training and informal learning is related to a significant additional improvement of workers’ skills. The skill development of workers who were initially underskilled for their job seems to benefit the most from both training and informal learning, whereas the skill development of those who were initially overskilled benefits the least. Work-related learning investments in the latter group seem to be more functional in offsetting skill depreciation than in fostering skill accumulation.

In this chapter we review the economic literature on the various causes of skills obsolescence and the ways in which skills obsolescence has been modelled or estimated. Most of the literature focuses on skills obsolescence due to atrophy and worker displacements. Skills obsolescence may, however, also be due to the wear of skills, technological and organizational developments, shifts in the structure of employment and organizational forgetting. In the second part of the chapter, we discuss measures for skills obsolescence. Skills obsolescence measures are related to both the cause of skills obsolescence and the way in which it manifests itself.

The combination of technological innovation with an ageing labor force makes skills obsolescence one of the main themes of current research in labor economics. Related to this issue, we study whether or not employers think their labor force is sufficiently equipped for future demands. For this purpose we use firm-level panel data for the Dutch economy. The results show that both the composition of the work force and firm-specific characteristics explain part of the observed differences between firms. Firms that use advanced technology and are product innovators have the highest probability of experiencing problems due to insufficient competences. The analysis of the dynamics of perceived competence problems shows that these are less likely to be persistent in technologically more advanced firms.

In our analyses, using data on Dutch tertiary education graduates, we use a direct measure for skills obsolescence based on workers' self-assessment. On average, almost a third of the skills obtained in tertiary education were obsolete seven years later. Skills obsolescence is strongly related to rapid changes in work domain, and to shortcomings in tertiary education. Obsolescence occurs as much in generic as in specific fields of study. It is only weakly related to current skill shortages, and not at all to the prospects for further skill acquisition, wages and investments in additional training.

This paper addresses the long run consequences of skills mismatches generated by innovation for those workers who are not involved in the process of innovation. Skills mismatches are interpreted as indicators of skills obsolescence. We impose the need of specific skills for successful implementation of new technologies in final production. While the work-force has to be compensated by the cost of implementing new technologies the compensation is limited by the productivity of the new design. If the cost of acquiring skills is high relative to the compensation then growth slows down irrespective of the amount of resources devoted to R&D.

The paper analyses skills obsolescence during transition to the market economy, using individual wage data from Hungary, 1986–1999. The link between workers' age composition and firms' productivity is also examined using firm-level information. Transition started with the collapse of demand for unskilled labor and the concomitant improvement in the relative position of skilled workers. At later stages of the transition, when technological change gained impetus, general appreciation of skilled labor stopped. Since 1992 the market value of skills acquired under communism has been falling. Consistent with the wage data, the productivity estimates suggest the devaluation of skills acquired under communism.

This paper examines the impact on the experience-earnings profile of a worker's ageing and of the human capital depreciation due to the obsolescence of schooling in Switzerland. To disentangle the vintage effect from the age effect, we follow the methodological idea proposed by Neuman and Weiss (1995). The results show that vintage effects are relatively pronounced in Swiss manufacturing: there is greater depreciation in the return on experience for better educated workers in both low and high-tech industries, but this depreciation is significantly higher for high-tech workers.