Technical Progress and Early Retirement*

TitleTechnical Progress and Early Retirement*
Publication TypeJournal Article
Year of Publication2011
AuthorsAhituv, A, Zeira, J
JournalThe Economic JournalThe Economic Journal
Pagination171 - 193
ISBN Number0013-0133
KeywordsEarly retirement, erosion effect, Technology, wage effect

This article examines the effect of sector technical change on early retirement and identifies two opposing effects. One is caused by the need to learn the new technologies. As older workers have shorter career horizons, they gain less from such learning and retire earlier. This is the erosion effect. The second effect is opposite. Since technologies are positively correlated across sectors and since aggregate technical change raises aggregate wages, sector technical change is negatively related to early retirement. This is the wage effect. Using individual and sector data, we separate the two effects and find empirical support for the theory.

Citation Key10871