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

Author

Listed:
  • Gohl, Niklas

    (DIW Berlin and Potsdam University)

  • Haan, Peter

    (DIW Berlin and FU Berlin)

  • Kurz, ElisabethWeinhardt, Felix

    (DIW Berlin, CESifo, IZA, CEP/LSE)

Abstract

In this paper we present a life-cycle model with human capital investment during working life through training and provide a novel empirical test of human capital theory. Using a sizable pension reform which shifts the retirement age between two adjacent cohorts by three years, we document causal evidence that an increase in the working life increases investment into human capital through training. We estimate this effect using a regression discontinuity design based on a large sample from the German microcensus. We discuss and test further predictions regarding the relation between initial schooling, training, and the reform effect and show 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, ElisabethWeinhardt, Felix, 2019. "Working Life and Human Capital Investment: Causal Evidence from Pension Reform," Rationality and Competition Discussion Paper Series 212, CRC TRR 190 Rationality and Competition.
    • Handle: RePEc:rco:dpaper:212
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    More about this item

    Keywords

    human capital; retirement policies; 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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