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Technical Progress and Early Retirement

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Author Info
Avner Ahituv
Joeph Zeira () (The Hebrew University of Jerusalem and CEPR)

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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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Publisher 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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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Chari, V V & Hopenhayn, Hugo, 1991. "Vintage Human Capital, Growth, and the Diffusion of New Technology," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1142-65, December. [Downloadable!] (restricted)
  2. Alan L. Gustman & Thomas L. Steinmeier, 2000. "Retirement Outcomes in the Health and Retirement Study," NBER Working Papers 7588, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-73, September. [Downloadable!] (restricted)
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  4. Oded Galor & Omer Moav, 2000. "Ability-Biased Technological Transition, Wage Inequality, And Economic Growth," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 469-497, May. [Downloadable!] (restricted)
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  5. Orley Ashenfelter & David Card, 2001. "Did the Elimination of Mandatory Retirement Affect Faculty Retirement Flows?," NBER Working Papers 8378, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Dale W. Jorgenson & Kevin J. Stiroh, 1999. "Information Technology and Growth," American Economic Review, American Economic Association, vol. 89(2), pages 109-115, May. [Downloadable!] (restricted)
  7. Ann P. Bartel & Nachum Sicherman, 1999. "Technological Change and Wages: An Interindustry Analysis," Journal of Political Economy, University of Chicago Press, vol. 107(2), pages 285-325, April. [Downloadable!] (restricted)
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  8. Leora Friedberg, 2003. "The impact of technological change on older workers: Evidence from data on computer use," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 56(3), pages 511-529, April.
  9. Aghion, Philippe & Howitt, Peter, 1994. "Growth and Unemployment," Review of Economic Studies, Blackwell Publishing, vol. 61(3), pages 477-94, July. [Downloadable!] (restricted)
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  10. repec:fth:harver:1487 is not listed on IDEAS
  11. Dale W. Jorgenson & Kevin J. Stiroh, 2000. "Raising the Speed Limit: US Economic Growth in the Information Age," OECD Economics Department Working Papers 261, OECD Economics Department. [Downloadable!]
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  12. Jordi Gali, 1999. "Technology, Employment, and the Business Cycle: Do Technology Shocks Explain Aggregate Fluctuations?," American Economic Review, American Economic Association, vol. 89(1), pages 249-271, March. [Downloadable!] (restricted)
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  13. Peracchi, Franco & Welch, Finis, 1994. "Trends in Labor Force Transitions of Older Men and Women," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 210-42, April. [Downloadable!] (restricted)
  14. Boucekkine, Raouf & de la Croix, David & Licandro, Omar, 2002. "Vintage Human Capital, Demographic Trends, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 104(2), pages 340-375, June. [Downloadable!] (restricted)
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  15. Stock, James H & Wise, David A, 1990. "Pensions, the Option Value of Work, and Retirement," Econometrica, Econometric Society, vol. 58(5), pages 1151-80, September. [Downloadable!] (restricted)
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  16. Feldstein, Martin S, 1974. "Social Security, Induced Retirement, and Aggregate Capital Accumulation," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 905-26, Sept./Oct. [Downloadable!] (restricted)
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  1. Torbjørn Hægeland, Dag Rønningen and Kjell G. Salvanes, 2007. "Adapt or withdraw? Evidence on technological changes and early retirement using matched worker-firm data," Discussion Papers 509, Research Department of Statistics Norway. [Downloadable!]
  2. Vegard Skirbekk, 2003. "Age and individual productivity: a literature survey," MPIDR Working Papers WP-2003-028, Max Planck Institute for Demographic Research, Rostock, Germany. [Downloadable!]
  3. J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "The Macroeconomics of Early Retirement," Working Papers 2003-05, FEDEA. [Downloadable!]
    Other versions:
  4. Andrea Ichino & Guido Schwerdt & Rudolf Winter-Ebmer & Josef Zweimüller, 2007. "Too Old to Work, Too Young to Retire?," IZA Discussion Papers 3110, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Justina A.V. Fischer & Alfonso Sousa-Poza, 2006. "The Institutional Determinants of Early Retirement in Europe," University of St. Gallen Department of Economics working paper series 2006 2006-08, Department of Economics, University of St. Gallen. [Downloadable!]
  6. Martin Debus & Jochen Michaelis, 2006. "Ausbildung, Erwerbsphase, Renteneintritt - demografischer Wandel und optimale Zeitallokation im Lebenszyklus," Discussion Papers in Economics 79/06, University of Kassel, Institute of Economics. [Downloadable!]
  7. Schleife, Katrin, 2004. "Computer Use and the Employment Status of Older Workers : An Analysis Based on Individual Data," ZEW Discussion Papers 04-62, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  8. Borghans,Lex & Weel,Bas,ter, 2002. "Do Older Workers Have More Trouble Using a Computer Than Younger Workers?," Research Memoranda 003, Maastricht : ROA, Researchcentrum voor Onderwijs en Arbeidsmarkt. [Downloadable!]
  9. Claudio Michelacci & David Lopez-Salido, 2004. "Technology Shocks And Job Flows," Working Papers wp2004_05, CEMFI. [Downloadable!]
    Other versions:
  10. Katrin Schleife, 2004. "Computer Use and the Employment Status of Older Workers - An Analysis Based on Individual Data," Darmstadt Discussion Papers in Economics 145, Institut für Volkswirtschaftslehre (Department of Economics), Technische Universität Darmstadt (Darmstadt University of Technology). [Downloadable!]
  11. Lutz Schneider, 2007. "Alterung und technologisches Innovationspotential : Eine Linked-Employer-Employee-Analyse," IWH Discussion Papers 2-07, Halle Institute for Economic Research. [Downloadable!]
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