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Training and Retirement

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  • Kristensen, Nicolai

    ()
    (KORA - Danish Institute for Local and Regional Government Research)

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    Abstract

    This paper presents results on the effect of formal life-long learning on the decision to retire early. Specifically, I estimate an Option Value model based on individual employer-employee longitudinal data including comprehensive government co-sponsored training records dating back more than 30 years. Human capital theory predicts that the amount of training and the length of working life will be positively correlated in order to recoup investment and yield a higher return. Significant upper bound effects of training in prolonging working life are found for certain types of training and certain groups of workers. However, out-of-sample simulations indicate that on average one year of training only adds up to one month to the career length. This means that training in itself is not enough to substantially prolong careers and increase the workforce.

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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6301.

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    Length: 40 pages
    Date of creation: Jan 2012
    Date of revision:
    Handle: RePEc:iza:izadps:dp6301

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    Related research

    Keywords: training; retirement; option value; upper bound identification;

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    References

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    1. Charles F. Manski & John V. Pepper, 2000. "Monotone Instrumental Variables, with an Application to the Returns to Schooling," Econometrica, Econometric Society, Econometric Society, vol. 68(4), pages 997-1012, July.
    2. Moller Dano, Anne & Ejrnaes, Mette & Husted, Leif, 2005. "Do single women value early retirement more than single men?," Labour Economics, Elsevier, vol. 12(1), pages 47-71, February.
    3. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
    4. John Rust & Christopher Phelan, 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Public Economics, EconWPA 9406005, EconWPA, revised 06 Jul 1994.
    5. Mark Y. An & Bent Jesper Christensen & Nabanita Datta Gupta, 2004. "Multivariate mixed proportional hazard modelling of the joint retirement of married couples," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 19(6), pages 687-704.
    6. Paul Bingley & Gauthier Lanot, 2006. "Public Pension Programmes and the Retirement of Married Couples in Denmark," Keele Economics Research Papers KERP 2006/20, Centre for Economic Research, Keele University.
    7. de Luna, Xavier & Stenberg, Anders & Westerlund, Olle, 2008. "Can Adult Education Delay Retirement from the Labour Market?," Umeå Economic Studies 756, Umeå University, Department of Economics.
    8. James J. Heckman, 2000. "Policies to Foster Human Capital," JCPR Working Papers 154, Northwestern University/University of Chicago Joint Center for Poverty Research.
    9. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 75, pages 352.
    10. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 66, pages 281.
    11. Paul Bingley & Nabanita Datta Gupta & Peder J. Pedersen, 2004. "The Impact of Incentives on Retirement in Denmark," NBER Chapters, in: Social Security Programs and Retirement around the World: Micro-Estimation, pages 153-234 National Bureau of Economic Research, Inc.
    12. Bartel, Ann P & Sicherman, Nachum, 1993. "Technological Change and Retirement Decisions of Older Workers," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 11(1), pages 162-83, January.
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    Cited by:
    1. Jan Hagemejer & Marcin Bielecki & Karolina Goraus & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," EcoMod2014 6868, EcoMod.
    2. Marcin Bielecki & Karolina Goraus & Jan Hagemejer & Joanna Tyrowicz, 2014. "The Sooner The Better - The Welfare Effects of the Retirement Age Increase Under Various Pension Schemes," Working Papers 2014-12, Faculty of Economic Sciences, University of Warsaw.
    3. Guerrazzi, Marco, 2014. "Workforce ageing and the training propensity of Italian firms: cross-sectional evidence from the INDACO survey," MPRA Paper 56826, University Library of Munich, Germany.
    4. Anna Ruzik-Sierdzinska & Claudia Villosio & Michele Belloni & Maciej Lis & Monika Potoczna, 2013. "Age and productivity. Human Capital Accumulation and Depreciation," CASE Network Reports 0114, CASE-Center for Social and Economic Research.
    5. Singer, Christine & Toomet, Ott-Siim, 2013. "On government-subsidized training programs for older workers," IAB Discussion Paper 201321, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].

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