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

Diskussionspapiere extern

Niklas Gohl, Peter Haan, Elisabeth Kurz, Felix Weinhardt

Bonn: IZA, 2020, 40 S.
(Discussion Paper Series / Forschungsinstitut zur Zukunft der Arbeit ; 12891)


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.

Felix Weinhardt

Research Associate in the Public Economics Department

Peter Haan

Head of Department in the Public Economics Department

JEL-Classification: J24;J26;H21
Keywords: human capital, retirement policies, RDD
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