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M. Kerndler:
"The twin hypothesis of education and retirement";
Betreuer/in(nen): A. Fürnkranz-Prskawetz; Institut für Wirtschaftsmathematik, Forschungsgruppe Ökonomie, 2013; Abschlussprüfung: 14.08.2013.

Common models examining the effects of demographic change and
the efficiency of policy reforms often suffer from two important shortcomings:
(i) interaction between an individual´s schooling and retirement
decision is disregarded and (ii) a realistic demographic population
structure is absent. In order to overcome these limitations, we
combine two papers of Ben J. Heijdra and Ward E. Romp who developed
a continuous time overlapping generations model in the manner
of Blanchard (1985) allowing for age-dependent mortality rates. In our
modification of their work, agents choose both length of schooling and
retirement age endogenously. Pension benefits are calculated from lifetime
wage earnings which positively depend on the level of education.
On the aggregate, dynamics are rather complicated due to generational
turnover effects and a human capital externality. Nevertheless,
we present a comparative static analysis of long-run effects as well as
numerical simulations for the transition paths following demographic
shocks and fiscal stimuli. We find that not controlling for individual
adjustments in education and retirement at the same time will overestimate
the negative impacts of aging on the macroeconomy. Similarly,
the economic impact of education reforms is found to be much stronger
if not only schooling but also retirement is treated as endogenous.

education, retirement, life cycle models, dynamic optimization