Economic Retirement Age and Lifelong Learning: A Theoretical Model With Heterogeneous Labor, Biased Technical Change and International Sourcing

Thomas Gries 1 , Stefan Jungblut 1 , Henning Meyer 1  and Tim Krieger 2
  • 1 University of Paderborn, Department of Economics,, Paderborn, Germany
  • 2 University of Freiburg, Department of Economics,, Freiburg im Breisgau, Germany

Abstract

The employability of an aging population in a world of continuous and biased technical change is top of the political agenda. Due to endogenous human capital depreciation the effective retirement age is often below statutory retirement age resulting in permanent non-employability of older workers. We analyze this phenomenon in a putty-putty human capital vintage model and focus on education and the speed of human capital depreciation. Introducing a two-stage education system with initial schooling and lifelong learning, not even lifelong learning turns out to be capable of aligning economic and statutory retirement. However, well-designed education programs will keep more workers in highly productive activities at the end of their working life, and hence will substitute for simple social transfers, or for an early switch towards very low paid jobs.

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German Economic Review (GER), the official publication of the German Economic Association (Verein für Socialpolitik), is an international journal publishing original and rigorous research of general interest in a broad range of economic disciplines. The scope of research approaches includes theoretical, empirical and experimental work.

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