Technical Progress and Early Retirement

Ahituv, Avner and Zeira, Joseph (2004) Technical Progress and Early Retirement. [Working Paper]. Social Science Electronic Pub. p. 41. SSRN Working Paper Series

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Abstract/Index

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.


Item Type:Report / Paper (Working Paper)
Research documents and activity classification:Working Papers > Non-Refereed Working Papers / of national relevance only
Divisions:Department of Business and Management
Additional Information:An other version of the paper is available under subscription in "CEPR Discussion Papers" no. 2614, 2000. http://www.cepr.org/pubs/new-dps/dplist.asp?dpno=2614
Uncontrolled Keywords:Technical Progress, Human Capital, Early Retirement, Labor Force Participation.
MIUR Scientific Area:Area 13 - Economics and Statistics > SECS-P/01 Political Economy
Deposited By:Maria Teresa Nistico
Deposited On:22 Dec 2010 12:20
Last Modified:22 Dec 2010 13:02

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