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Older workers typically possess older vintages of skills than younger workers, and they may suffermore from technological change. Experienced workers may nevertheless have accumulated humancapital making them suitable for adopting new technologies. On the other hand, to adjust to newtechnologies, workers must invest in training. This may not be worthwhile for the oldest workers, andtechnological change may thus induce early retirement. If technological change occurs often,workers will continuously invest in training, which may insulate them from the negative effect oftechnological change. We exploit the approach by Bartel and Sicherman (1993) to identify this effectby estimating the retirement response to technological change. We examine two hypotheses aboutthe effects of technological changes on early retirement for workers from the age of 50 to themandatory age of retirement at 67. First, we examine whether workers in firms with higher rates ofanticipated technological change retire later than workers in firms with lower rates of technologicalchange. Second, we examine if unanticipated technological change is positively correlated withearlier retirement. We use a matched employer-employee data set with a rich set of controls forworker, firm and local labour market characteristics, and firm level measures of anticipated and notanticipatedtechnological change. We find a negative correlation between early retirement andanticipated technological change only for the oldest male workers (62 to 66). Further, we find ahigher probability of transition to retirement for workers above 60 for firms introducing new processtechnologies

Adapt or Withdraw? Evidence on Technological Changes and Early Retirement Using Matched Worker-Firm Data