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

Niklas Gohl, Peter Haan and Kurz, ElisabethWeinhardt, Felix
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Niklas Gohl: DIW Berlin and Potsdam University
Peter Haan: DIW Berlin and FU Berlin
Kurz, ElisabethWeinhardt, Felix: DIW Berlin, CESifo, IZA, CEP/LSE

No 212, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

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.

Keywords: human capital; retirement policies; RDD (search for similar items in EconPapers)
JEL-codes: H21 J24 J26 (search for similar items in EconPapers)
Date: 2019-12-11
New Economics Papers: this item is included in nep-age, nep-eur and nep-hea
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Persistent link: https://EconPapers.repec.org/RePEc:rco:dpaper:212

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