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

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    References

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    1. Paul Bingley & Gauthier Lanot, 2007. "Public pension programmes and the retirement of married couples in Denmark," NBER Chapters, in: Trans-Atlantic Public Economics Seminar (TAPES), Public Policy and Retirement, pages 1878-1901 National Bureau of Economic Research, Inc.
    2. Yoram Ben-Porath, 1967. "The Production of Human Capital and the Life Cycle of Earnings," Journal of Political Economy, University of Chicago Press, vol. 75, pages 352.
    3. James Heckman & Pedro Carneiro, 2003. "Human Capital Policy," NBER Working Papers 9495, National Bureau of Economic Research, Inc.
    4. Charles F. Manski & John V. Pepper, 2000. "Monotone Instrumental Variables, with an Application to the Returns to Schooling," Econometrica, Econometric Society, vol. 68(4), pages 997-1012, July.
    5. Anders Stenberg & Xavier Luna & Olle Westerlund, 2012. "Can adult education delay retirement from the labour market?," Journal of Population Economics, Springer, vol. 25(2), pages 677-696, January.
    6. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
    7. James J. Heckman, 1999. "Policies to Foster Human Capital," NBER Working Papers 7288, National Bureau of Economic Research, Inc.
    8. Rust, J., 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Working papers 9430, Wisconsin Madison - Social Systems.
    9. Anne Møller Danø & Mette Ejrnæs & Leif Husted, 2004. "Do Single Women Value Early Retirement more than Single Men?," CAM Working Papers 2004-06, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
    10. 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., vol. 19(6), pages 687-704.
    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, vol. 11(1), pages 162-83, January.
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    Cited by:
    1. 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.
    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. 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].
    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.

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