A common starting point in understanding investments in learning is that people participate in education when the life-cycle returns to education outweigh its costs. Since people will reap the higher wages associated with education for longer and experience lower opportunity costs, they should make investments in education before entering the labor market—not as adults. Investments in human capital in adulthood can be explained by various departures from this simple model by bringing in issues like skill obsolescence, technological change, and uncertainty. Adult learning can take place in formal educational institutions as well as in the workplace. The empirical strategies used to evaluate adult education vary with the forms these investments take. Studies of formal adult education generally show positive effects on earnings, although there is substantial heterogeneity across education programs and students. Black-box approaches to studying firm-specific patterns of wage growth suggest that investments in learning in the workplace are also likely to be important in explaining earnings dynamics across firms by worker experience. Nonetheless, given the heterogeneity of forms that firm-provided adult education can take, it can be hard to achieve a bird’s-eye view of how and when firms invest in adult learning, or which forms of investment are effective.
Oxford Research Encyclopedia of Economics and Finance, online, 19 June 2025.
