Upskilling for the Future: The Role of Training on Labour Market Outcomes in the Era of Technological Change

This paper examines skill dynamics and importance of training on skill development and employment in Canada from 2012-2020. Using data from the Longitudinal and International Study of Adults (LISA), I examine the dynamics of six skills: leadership, writing, reading, numerical, ICT, and manual skills. I then explore the role of training on skill development and labour market outcomes in a search and matching framework with human capital heterogeneity and endogenous training decisions. In the model, workers are motivated to train to increase their stock of skills, and, therefore, wages. Firms incentivize training to improve firm-worker specific match, which determines firm’s surplus. The results reveal labour market adjustment patterns consistent with routine-biased technical change. Workers either acquire new skills through training, adapting to the labour market’s increasing demand for skills, or move into low-skill non-routine service jobs.