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Working Life and Human Capital Investment: Causal Evidence from Pension Reform

Author

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  • Gohl, Niklas

    (DIW Berlin)

  • Haan, Peter

    (DIW Berlin)

  • Kurz, Elisabeth

    (Frontier Economics)

  • Weinhardt, Felix

    (European University Viadrina, Frankfurt / Oder)

Abstract

This paper presents a life-cycle model with human capital investment during working life through training and provides a novel empirical test of human capital theory. We exploit a sizable pension reform across adjacent cohorts in a regression discontinuity setting and find that an increase in working life increases training. We discuss and test further predictions regarding the relation between initial schooling, training, and the reform effect, showing that only individuals with a college degree increase human capital investment. Our results speak to a large class of human capital models as well as policies extending or shortening working life.

Suggested Citation

  • Gohl, Niklas & Haan, Peter & Kurz, Elisabeth & Weinhardt, Felix, 2020. "Working Life and Human Capital Investment: Causal Evidence from Pension Reform," IZA Discussion Papers 12891, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12891
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    Cited by:

    1. Teresa Backhaus, 2022. "Training in Late Careers - A Structural Approach," CRC TR 224 Discussion Paper Series crctr224_2022_382, University of Bonn and University of Mannheim, Germany.
    2. Fürstenau, Elisabeth & Gohl, Niklas & Haan, Peter & Weinhardt, Felix, 2023. "Working life and human capital investment: Causal evidence from a pension reform," Labour Economics, Elsevier, vol. 84(C).
    3. Barschkett, Mara & Geyer, Johannes & Haan, Peter & Hammerschmid, Anna, 2022. "The effects of an increase in the retirement age on health — Evidence from administrative data," The Journal of the Economics of Ageing, Elsevier, vol. 23(C).
    4. Barschkett, Mara & Geyer, Johannes & Haan, Peter & Hammerschmid, Anna, 2022. "The effects of an increase in the retirement age on health — Evidence from administrative data," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 23, pages 1-53.
    5. Niklas Gohl, 2023. "Working Longer, Working Stronger? The Forward-Looking Effects of Increasing the Retirement Age on (Un)employment Behaviour," Berlin School of Economics Discussion Papers 0013, Berlin School of Economics.
    6. Schön, Matthias, 2020. "Long-term outlook for the German statutory pension system," Discussion Papers 22/2020, Deutsche Bundesbank.

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    More about this item

    Keywords

    retirement policies; human capital; RDD;
    All these keywords.

    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
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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