May 2008

IZA DP No. 3504: Training Background and Early Retirement

published as 'Training and retirement patterns' in: Applied Economics, 2013, 45 (15), 1991-1999

Several studies show that employees with firm-specific skills are more likely to be covered by employer-sponsored pension schemes than workers with general skills. Therefore it can be expected that workers with firm-specific skills retire earlier. This paper tests this prediction using US data from the National Longitudinal Survey of Older Men. We find that workers who participated in firm-specific training in their early careers retire earlier than workers with a general training background. This indicates that shared investments in firm-specific training are embedded in implicit contracts that induce early retirement. The results remain robust when controlling for technological change and work commitment.