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Training Background and Early Retirement

  • Montizaan, Raymond

    ()

    (ROA, Maastricht University)

  • Cörvers, Frank

    ()

    (ROA, Maastricht University)

  • de Grip, Andries

    ()

    (ROA, Maastricht University)

Several studies show that employees with firm-specific skills are more likely to be covered by employer-sponsored pension schemes than workers with general skills. Therefore it can be expected that workers with firm-specific skills retire earlier. This paper tests this prediction using US data from the National Longitudinal Survey of Older Men. We find that workers who participated in firm-specific training in their early careers retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in implicit contracts that induce early retirement. The results remain robust when controlling for technological change and work commitment.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3504.

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Length: 32 pages
Date of creation: May 2008
Date of revision:
Publication status: published as 'Training and retirement patterns' in: Applied Economics, 2013, 45 (15), 1991-1999
Handle: RePEc:iza:izadps:dp3504
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  1. 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.
  2. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
  3. Fella, Giulio, 2005. "Termination restrictions and investment in general training," European Economic Review, Elsevier, vol. 49(6), pages 1479-1499, August.
  4. Alan L. Gustman & Olivia S. Mitchell & Thomas L. Steinmeier, 1994. "The Role of Pensions in the Labor Market: A Survey of the Literature," ILR Review, Cornell University, ILR School, vol. 47(3), pages 417-438, April.
  5. James H. Stock & David A. Wise, 1988. "Pensions, The Option Value of Work, and Retirement," NBER Working Papers 2686, National Bureau of Economic Research, Inc.
  6. Daron Acemoglu & Jörn-Steffen Pischke, 1998. "Why Do Firms Train? Theory And Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(1), pages 78-118, February.
  7. Sarah Smith & James Banks, 2006. "Retirement in the UK," The Centre for Market and Public Organisation 06/140, Department of Economics, University of Bristol, UK.
  8. Smith, Sharon P, 1991. "Ending Mandatory Retirement in the Arts and Sciences," American Economic Review, American Economic Association, vol. 81(2), pages 106-10, May.
  9. Johnson, Richard W, 1996. "The Impact of Human Capital Investments on Pension Benefits," Journal of Labor Economics, University of Chicago Press, vol. 14(3), pages 520-54, July.
  10. Bingley, Paul & Lanot, Gauthier, 2004. "Employer pay policies, public transfers and the retirement decisions of men and women in Denmark," European Economic Review, Elsevier, vol. 48(1), pages 181-200, February.
  11. Chan, Sewin & Stevens, Ann Huff, 2004. "Do changes in pension incentives affect retirement? A longitudinal study of subjective retirement expectations," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1307-1333, July.
  12. Orley Ashenfelter & David Card, 2002. "Did the Elimination of Mandatory Retirement Affect Faculty Retirement?," American Economic Review, American Economic Association, vol. 92(4), pages 957-980, September.
  13. Kennan, John, 1979. "Bonding and the enforcement of labor contracts," Economics Letters, Elsevier, vol. 3(1), pages 61-66.
  14. Samwick, Andrew A., 1998. "New evidence on pensions, social security, and the timing of retirement," Journal of Public Economics, Elsevier, vol. 70(2), pages 207-236, November.
  15. Lazear, Edward P & Moore, Robert L, 1984. "Incentives, Productivity, and Labor Contracts," The Quarterly Journal of Economics, MIT Press, vol. 99(2), pages 275-96, May.
  16. Stevens, Margaret, 1994. "A Theoretical Model of On-the-Job Training with Imperfect Competition," Oxford Economic Papers, Oxford University Press, vol. 46(4), pages 537-62, October.
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