A study shows workers' intrinsic willingness to learn, regardless of employer requirement and financial constraints - by Stephan L. Thomsen, Jens Ruhose and Insa Weilag

Ruhose, Jens

Thomsen, Stephan L.

Weilage, Insa

English

LSE Research Online

There’s	no	such	thing	as	mental	retirement:	olderworkers	willingly	engage	in	learningPrejudices	about	unproductive	older	workers	are	widespread.	They	are	said	to	be	slower,	to	be	overwhelmed	bymodern	information	and	communication	technology	(ICT),	and	to	be	sick	more	often.	Based	on	these	beliefs,	itappears	that	employers	discriminate	against	older	individuals,	which	hurts	their	employment	prospects.	Moreover,	ifthe	beliefs	are	wrong,	firms	lose	older	workers’	potential	for	added	value.	At	the	societal	level,	wrongfully	dismissingolder	workers	is	detrimental	to	economic	prosperity	because	most	OECD	countries	face	both	skills	shortages	andoverburdened	pension	insurance	systems	due	to	ageing	populations.In	a	study,	we	put	one	aspect	of	this	narrative	to	the	test:	Are	older	workers	willing	to	learn?	This	question	isbecoming	increasingly	important	due	to	accelerating	technological	change	in	most	workplaces.	During	the	COVID-19	pandemic,	the	sudden	need	to	learn	how	to	use	digital	technologies	to	work	from	home	has	pushed	this	evenfurther.Our	results	suggest	that	older	people	who	are	close	to	retirement	are	still	interested	in	learning	and	acquiring	newskills,	even	when	they	do	not	have	to.	They	do	not	retire	mentally.	The	study	is	the	first	to	disentangle	the	intrinsicwillingness	of	workers	to	learn	–	at	a	time	when	they	are	usually	still	in	employment	–	from	other	factors,	such	asthe	requirements	of	the	employer	and	the	financial	constraints	on	the	worker.Our	research	complements	existing	survey-experimental	evidence	that	many	older	workers	would	work	pastretirement	(Ameriks	et	al,	2020),	and	that	older	people	are	as	competitive	as	younger	ones	(Charness	and	Villeval,2009).The	setting:	retirement	and	participation	in	community	learning	centresTo	identify	voluntary	learning	behaviour	in	older	workers,	we	examine	a	partial	retirement	legislation	in	Germany,which	was	in	place	between	1996	and	2009.	The	reform	encouraged	many	older	workers	to	drop	out	of	the	labourmarket	and	retire	up	to	five	years	early,	with	almost	no	deductions	on	their	retirement	income.	Figure	1	shows	that	alarge	number	of	men	enrolled	in	the	partial	retirement	programme.	At	the	peak	in	2009	(the	last	year	of	programmeentry),	the	number	of	participants	amounts	to	320,000	workers	(8%	of	the	population	in	this	age	group).	Since	mostof	them	would	have	remained	in	employment	in	the	absence	of	the	reform,	these	people	constitute	an	interestinggroup	to	study.	The	reason	is	that	older	workers	who	are	in	early	retirement	should	have	no	monetary	incentives	toinvest	in	work-related	training.	Likewise,	there	are	no	employer	demands	because	the	early	retirees	progressdirectly	to	full	retirement	after	the	conclusion	of	the	programme.LSE Business Review: There’s no such thing as mental retirement: older workers willingly engage in learning Page 1 of 5		Date originally posted: 2020-10-05Permalink: https://blogs.lse.ac.uk/businessreview/2020/10/05/theres-no-such-thing-as-mental-retirement-older-workers-willingly-engage-in-learning/Blog homepage: https://blogs.lse.ac.uk/businessreview/Figure	1.	Male	workers	in	partial	retirementNotes:	The	bar	chart	illustrates	the	development	of	the	number	of	men	in	the	partial	retirement	programme	in	West	Germany.Source:	German	Pension	Insurance	Fund	(DRV),	authors’	own	calculations.We	combine	the	reform	with	data	from	community	learning	centres	(CLCs),	which	exist	in	every	German	county	andoffer	non-formal	adult	education	for	a	small	fee	per	course.	We	focus	on	participation	in	work-related	coursesbecause	they	are	most	similar	to	actual	on-the-job	training	courses;	CLCs	even	offer	such	courses	to	firms.	Most	ofthese	courses	teach	ICT	skills.Figure	2	shows	the	mean	share	of	participants	in	work-related	CLC	courses	who	were	between	50	and	64	years	old(over	all	participants	in	work-related	CLC	courses).	The	share	rose	from	ten	per	cent	in	1995	to	almost	30	percentin	2014.Throughout	the	analysis,	we	focus	on	men	because	male	workers	used	the	opportunity	to	retire	early	morefrequently	than	women	did.	We	also	restrict	the	analysis	to	West	Germany	because	the	adult	education	sector	inEast	Germany	underwent	a	rigorous	restructuring	in	the	90s	after	the	fall	of	the	Iron	Curtain.Figure	2.	Share	of	50	to	64	year	old	persons	in	work-related	CLC	coursesLSE Business Review: There’s no such thing as mental retirement: older workers willingly engage in learning Page 2 of 5		Date originally posted: 2020-10-05Permalink: https://blogs.lse.ac.uk/businessreview/2020/10/05/theres-no-such-thing-as-mental-retirement-older-workers-willingly-engage-in-learning/Blog homepage: https://blogs.lse.ac.uk/businessreview/Notes:	The	binned	scatterplot	illustrates	the	development	of	the	mean	share	of	participations	of	persons	between	50	and	64	yearsold	in	work-related	courses	in	West	Germany.	Source:	CLC	statistics,	authors’	own	calculations.Figure	3.	How	the	partial	retirement	reform	influenced	CLC	attendanceLSE Business Review: There’s no such thing as mental retirement: older workers willingly engage in learning Page 3 of 5		Date originally posted: 2020-10-05Permalink: https://blogs.lse.ac.uk/businessreview/2020/10/05/theres-no-such-thing-as-mental-retirement-older-workers-willingly-engage-in-learning/Blog homepage: https://blogs.lse.ac.uk/businessreview/Notes:	The	figure	plots	the	point	estimates	and	95%	confidence	intervals.	Effects	are	relative	to	the	baseline	year	1999,	which	isindicated	by	the	vertical	line.	Sources:	Federal	Institute	for	Research	on	Building,	Urban	Affairs	and	Spatial	Development	(BBSR),CLC	statistics,	Federal	Bureau	of	Statistics,	authors’	own	calculations.Early	retirement	raises	participation	in	adult	educationTo	isolate	the	share	of	persons	who	participate	voluntarily	in	adult	education,	we	exploit	variation	in	the	populationshare	of	persons	eligible	for	the	early	retirement	programme	at	the	county	level.	Figure	3	reveals	that	theparticipation	share	in	work-related	courses	rose	more	strongly	in	counties	in	which	more	men	were	eligible	to	retireearly	than	in	counties	with	fewer	eligible	men.	For	example,	compared	to	the	baseline	year	1999,	we	find	that	aone-percentage	point	higher	population	share	of	men	aged	55	to	64	is	associated	with	a	significant	two	percentage-points	increase	the	CLC	share	of	persons	aged	50	to	64	in	work-related	courses.	The	effect	size	increased	overtime	as	more	eligible	individuals	entered	early	retirement.	In	general,	the	participation	pattern	in	Figure	3	roughlymimics	the	number	of	men	in	the	early	retirement	programme	from	Figure	1.	It	does	so	with	a	lag	of	two	to	threeyears,	which	is	what	the	average	programme	duration	would	suggest.To	conclude,	our	study	supports	the	notion	of	active	older	people	who	are	willing	to	engage	in	adult	education.	Thisis	an	important	result	because	it	highlights	their	potential	to	learn	new	skills	and	to	adapt	to	new	technologies.Moreover,	it	implies	the	feasibility	of	longer	working	lives,	which	is	crucial	for	mitigating	skills	shortages	andreducing	the	pressure	on	the	pension	insurance	system	in	many	countries.♣♣♣Notes:This	blog	post	is	based	on	Are	Older	Workers	Willing	to	Learn?,	IZA	discussion	paper	No.	13416,	presentedat	the	European	Economic	Association’s	Annual	Congress,	August	2020.The	post	expresses	the	views	of	its	author(s),	not	the	position	of	LSE	Business	Review	or	the	London	SchoolLSE Business Review: There’s no such thing as mental retirement: older workers willingly engage in learning Page 4 of 5		Date originally posted: 2020-10-05Permalink: https://blogs.lse.ac.uk/businessreview/2020/10/05/theres-no-such-thing-as-mental-retirement-older-workers-willingly-engage-in-learning/Blog homepage: https://blogs.lse.ac.uk/businessreview/of	Economics.Featured	image	by	Christian	Battaglia	on	UnsplashWhen	you	leave	a	comment,	you’re	agreeing	to	our	Comment	PolicyStephan	L.	Thomsen	is	a	professor	of	economics	at	the	Leibniz	University	Hannover,	Germany.	Heis	also	a	research	fellow	at	IZA	Bonn	and	research	associate	at	ZEW	Mannheim.	His	researchfocuses	on	applied	econometrics	and	(micro-)econometric	evaluations.	He	contributes	to	questionson	labour	and	educational	economics,	primarily	in	the	area	of	the	evaluation	of	political	reforms,human	capital,	migration,	and	social	security.	For	more	information,	visit	his	website.Jens	Ruhose	is	an	assistant	professor	of	economics	at	Kiel	University,	Germany.	Heis	also	a	research	affiliate	at	IZA	Bonn	and	CESifo	Munich.	His	main	research	interestsare	migration,	labour,	and	education	economics.	In	recent	years,	he	has	made	variouscontributions	studying	the	selection	of	migrants.	For	more	information,	visit	his	websiteor	follow	him	on	Twitter.	Insa	Weilage	is	a	PhD	student	at	the	Leibniz	University	Hannover,	Germany.	Her	research	focuseson	labour	markets	and	the	economics	of	(adult)	education.	For	more	on	her	work,	visit	her	website.			LSE Business Review: There’s no such thing as mental retirement: older workers willingly engage in learning Page 5 of 5		Date originally posted: 2020-10-05Permalink: https://blogs.lse.ac.uk/businessreview/2020/10/05/theres-no-such-thing-as-mental-retirement-older-workers-willingly-engage-in-learning/Blog homepage: https://blogs.lse.ac.uk/businessreview/

There’s no such thing as mental retirement: older workers willingly engage in learning

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There’s no such thing as mental retirement: older workers willingly engage in learning

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