Technical Progress, Retraining Cost and Early Retirement

36 Pages Posted: 11 Jul 2014  

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: June 12, 2014

Abstract

Technological progress affects early retirement in two opposing ways. On the one hand, it increases real wages and thus produces an incentive to postpone retirement. On the other hand, it erodes workers' skills, making early retirement more likely. Using the Health and Retirement Study surveys, we re-examine the effect of technical progress on early retirement, finding that when the technical change is small the erosion effect dominates, but when it is large the wage effect dominates. Our results imply that retraining cost is a strongly concave function with respect to technical progress.

Keywords: technical progress, retraining, retirement

JEL Classification: J24, J26, O33

Suggested Citation

Burlon, Lorenzo and Vilalta-Bufí, Montserrat, Technical Progress, Retraining Cost and Early Retirement (June 12, 2014). Bank of Italy Temi di Discussione (Working Paper) No. 963. Available at SSRN: https://ssrn.com/abstract=2464518 or http://dx.doi.org/10.2139/ssrn.2464518

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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