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Technical Progress, Sorting, and Early Retirement

Working Papers in Economics E13/294, Universitat de Barcelona, 2013

43 Pages Posted: 13 May 2013  

Lorenzo Burlon

Bank of Italy

Montserrat Vilalta-Bufí

University of Barcelona - Department of Economic Theory; University of Barcelona - Center for Research in Welfare Economics

Date Written: May 9, 2013

Abstract

Technological progress has been shown to affect early retirement via two opposite forces. On the one hand, it increases real wages and, therefore, creates incentives to delay retirement. On the other hand, it causes an erosion of workers' skills, which raises the probability of early retirement. We reexamine the effect of technological progress on early retirement by taking into account that, at the beginning of their working life, individuals sort into sectors according to their ability level. This gives us two main results: 1) for small (large) technical changes the wage (erosion) effect dominates, and 2) the more able individuals resist better the erosion effect.

Keywords: Technical Progress, Sorting, Retirement

JEL Classification: J24, J26, O33

Suggested Citation

Burlon, Lorenzo and Vilalta-Bufí, Montserrat, Technical Progress, Sorting, and Early Retirement (May 9, 2013). Working Papers in Economics E13/294, Universitat de Barcelona, 2013. Available at SSRN: https://ssrn.com/abstract=2264106 or http://dx.doi.org/10.2139/ssrn.2264106

Lorenzo Burlon (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Montserrat Vilalta-Bufí

University of Barcelona - Department of Economic Theory ( email )

Barcelona
Spain

University of Barcelona - Center for Research in Welfare Economics ( email )

Barcelona, 08028
Spain

HOME PAGE: http://www.creb.ub.edu/

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