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Technical Progress and Early Retirement

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  • Avner Ahituv
  • Joeph Zeira

    ()
    (The Hebrew University of Jerusalem and CEPR)

Abstract

This paper claims that technical progress induces early retirement of older workers. Technical progress erodes technology specific human capital. Since older workers have shorter career horizons, there is less incentive for them or for their employers to invest in learning how to use the new technologies. Consequently, they are more likely to stop working. We call this effect the erosion effect. Since technical progress also raises wages in the economy as a whole and since technical progress is positively correlated across sectors, this presents an opposite effect of technical progress, which we call the wage effect. Using individual and sector data, we separate the two effects and find support for our theory. JEL Specification: J24, J26, O15, O33

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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0801.

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Length: 43 pages
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Handle: RePEc:crt:wpaper:0801

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Keywords: Early Retirement; Technical Change; Human Capital; Labor For;

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