Different Degrees of Skill Obsolescence Across Hard and Soft Skills and the Role of Lifelong Learning for Labor Market Outcomes

* This paper examines the role of lifelong learning in counteracting skill depreciation and obsolescence. We build on findings showing that different skill types have structurally different depreciation rates. We differentiate between occupations with more hard skills versus more soft skills. To do so, we draw on representative job advertisement data that contain machine-learning categorized skill requirements and cover the Swiss job market in great detail across occupations (from 1950–2019). We examine lifelong learning effects for “harder” versus “softer” occupations, thereby analyzing the role of training in counteracting skill depreciation in occupations that are differently affected by skill depreciation. Our results reveal novel patterns regarding the benefits from lifelong learning across occupations: In harder occupations, with large shares of fast-depreciating hard skills, the role of lifelong learning is primarily as a hedge against unemployment risks rather than a boost to wages. In contrast, in softer occupations, in which workers build on more value-stable soft skill foundations, the role of lifelong learning instead lies mostly in acting as a boost for upward career mobility and leads to larger wage gains. This paper analyzes the role of lifelong learning in counteracting skill obsolescence. As workers’ occupational hard and soft skills have very different degrees of skill obsolescence and susceptibility to technological change, our analysis differentiates between these two skill types. Our results reveal distinctive patterns of labor market returns according to whether occupations are harder (versus softer) and demonstrate an important tradeoff in the labor market returns and training participation. While harder occupations are on average associated with higher wages, this wage advantage comes at the cost of decreased employment probabilities without training participation. The employment differences depending on training participation along the hard-soft skill spectrum are considerable: While for the softest occupations in our sample we find no statistical differences in the employment probabilities between workers who participate in training and those who do not, for the hardest occupations this difference amounts to up to 4% (which is substantial given the generally small average unemployment rate of 3% in Switzerland). training with hard-skill and soft-skill skills, respectively. Following our narrow definition of hard and soft skills, we assigned training measures in informatics, finance, production, and science to hard-skill training, whereas we assigned training measures in management, personality, and language to soft-skill training. in (i.e., health and teaching). hard-skill and soft-skill skills, respectively. our narrow definition of and soft skills, we assigned finance, production, and science to hard-skill training, whereas we and to