HRSDC-IC-SSHRC Skills Research Initiative

Working Paper Series

Skills, Human Capital and the Life Cycle

by Peter Kuhn.

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Abstract

This paper seeks, first, to clarify the various senses that economists attach to the term "skill" and to compare them to how the term is used by non-economists. Next, the paper draws on existing research by economists and psychologists in order to evaluate the impact of population aging on the skills composition of the work force and the adjustment capacity of the Canadian economy. Existing research suggests offsetting effects of population aging on skills. On the one hand, the capacity to acquire skills decreases with aging and this seems to be due in large part to biological factors. On the other hand, older workers have more accumulated skills, greater accumulated assets and shorter planning horizons. It might seem paradoxal that the last two factors may make older workers more likely than younger workers to make "risky" skills investments with a short pay-off horizon.