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Technical progress, retraining cost and early retirement

Author

Listed:
  • Lorenzo Burlon

    () (Bank of Italy)

  • Montserrat Vilalta-Buf�

    () (University of Barcelona)

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.

Suggested Citation

  • Lorenzo Burlon & Montserrat Vilalta-Buf�, 2014. "Technical progress, retraining cost and early retirement," Temi di discussione (Economic working papers) 963, Bank of Italy, Economic Research and International Relations Area.
  • Handle: RePEc:bdi:wptemi:td_963_14
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    File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2014/2014-0963/en_tema_963.pdf
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    References listed on IDEAS

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    Cited by:

    1. Nucci, Francesco & Riggi, Marianna, 2018. "Labor force participation, wage rigidities, and inflation," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 274-292.
    2. Lorenzo Burlon & Montserrat Vilalta-Bufí, 2016. "A new look at technical progress and early retirement," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-39, December.

    More about this item

    Keywords

    technical progress; retraining; retirement;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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