Technical Progress and Early Retirement

Bibliographic Data

ID9717492
AuthorsAvner Ahituv (Carmel Academic Centre), Joseph Zeira (0000-0002-9171-4599, The Hebrew University of Jerusalem, LUISS Guido Carli and CEPR)
Year2011
Volume121
Issue551
Pages171-193
Publication date2011-03-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Economic Journal (JOURNAL)
Journal identifiersISSN: 0013-0133 • E-ISSN: 1468-0297
PublisherOxford University Press (OUP) (PUBLISHER)
DOI10.1111/j.1468-0297.2010.02392.x
OpenAlexW3123276122
LanguageEN
Citations received6
References cited13

This paper claims that technical progress induces early retirement of older workers. It presents a model where human capital is technology specific, so that technical progress erodes some existing human capital. This affects mostly older workers, who have a smaller incentive to learn the new technology, since their career horizon is shorter. Hence, they tend to work less. We find support to this erosion effect in HRS data, which shows that retirement and unemployment of older workers are positively related to technical progress in their sectors. Unlike the effect across sectors, the model is ambiguous about the aggregate effect of technical progress on labor supply of older workers. While in sectors with many innovations it falls due to the erosion effect, in other sectors it increases due to higher wages. To examine which effect dominates we run a time series test using US data and find that the rate of average technical progress reduces aggregate labor force participation by the old. Namely, the erosion effect dominates

Economic growth · Economics · Human capital · Incentive · Labour economics · Macroeconomics · Microeconomics · Productivity · Technical change · Technological change · Unemployment · Work (physics · Engineering · Financial Literacy, Pension, Retirement Analysis · Labor market dynamics and wage inequality · Retirement, Disability, and Employment

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