Retirement intentions in the presence of technological change: theory and evidence from France

Pierre-Jean Messe,Francois-Charles Wolff,Eva Moreno-Galbis

doi:10.1186/2193-8997-3-8

Pierre-Jean Messe, Francois-Charles Wolff + Show 1 more

Open Access

https://doi.org/10.1186/2193-8997-3-8

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Abstract

Abstract This paper investigates the role of productivity as a determinant of the worker’s retirement intentions. Using an overlapping generation framework, we analyze the retirement decision of a cohort of workers being ability heterogeneous. The labor market is endogenously segmented between workers having the required ability level to occupy jobs where the productivity is indexed to the technological state via on-the-job training (complex jobs) and the rest of workers, who are employed in positions where productivity is relatively deteriorated in case of technological change due to the absence of on-the-job training (simple jobs). In case of technological change, workers in complex jobs delay their retirement date, whereas workers in simple positions will not modify their retirement decision unless taxes change. Using data from France, we find that after a technological change, older workers who benefit from a skill upgrading training program have a higher intended retirement age. JEL J14; J22; J24; J26

Highlights

Many papers have highlighted the negative effect of technical change on older workers’ employment rate (Bartel and Sichermann (1993), Aubert et al (2006), Beckmann (2007), Ronningen (2007) or see Ahituv and Zeira (2011))
We argue that workers benefiting from on-the-job training after a technological change will see their productivity indexed to the state of technology, whereas workers not concerned with a training program will suffer skill obsolescence
We examine whether the effect of a technical change on retirement intentions of workers may depend on the way their productivity is indexed to the state of technology through on-the-job training

Summary

Introduction

Many papers have highlighted the negative effect of technical change on older workers’ employment rate (Bartel and Sichermann (1993), Aubert et al (2006), Beckmann (2007), Ronningen (2007) or see Ahituv and Zeira (2011)). To investigate the effect of technical change and onthe-job training on retirement intentions, we use the Changements Organisationnels et Informatisation survey (COI, “Organizational Changes and Computerization” survey) conducted in the same year and construct aggregate variables within a local labor market, made up of a specific industry and occupation Using such recent databases constitutes a great advantage with respect to the existing literature on the subject, since by 2006 there was no incertitude concerning the diffusion process of new technologies among occupations. The theoretical framework and numerical simulations predict that workers whose productivity is improved together with the state of technology (by means of on-the-job training) tend to retire later than workers who do not receive training and bear a relative skill obsolescence in case of technological change These findings are confirmed by our empirical results.

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