Age and cognitive skills: Use it or lose it.

Abstract

Cross-sectional age-skill profiles suggest that cognitive skills start declining by age 30 if not earlier. If accurate, such age-driven skill losses pose a major threat to the human capital of societies with rapidly aging populations. We estimate actual age-skill profiles from individual changes in literacy and numeracy skills at different ages. We use the unique German longitudinal component of the Programme of the International Assessment of Adult Competencies (PIAAC-L) that retested a large representative sample of adults after 3.5 years. Our empirical approach separates age from cohort effects and corrects for measurement error from reversion to the mean. Two main results emerge. First, average skills increase strongly into the forties before decreasing slightly in literacy and more strongly in numeracy. Second, skills decline at older ages only for those with below-average skill usage. White-collar and higher-educated workers with above-average usage show increasing skills even beyond their forties. Women have larger skill losses at older age, particularly in numeracy.