Human Capital and Retirement

This paper investigates the relation between human capital andretirement when the age of retirement is endogenous. This relation isexamined in a life-cycle earnings model. An employee works full timeuntil retirement. The worker accumulates human capital by training-on-the-job and by learning-by-doing. The human capital of an employeeis subject to depreciation when knowledge of technologies becomesobsolete. After a shock in technology, the worker depreciates on hishuman capital. The lower human capital results in a lower life-timeincome, but also in a lower price of an earlier retirement.