Effects of technological progress on the decision to retire early. Evidence for Europe

We provide one of the first analyses, in an EU-wide setting, of the implications of digitalization and automation on employment and the decision to retire. The analyses are based on several European databases. The first set of analyses rely on the EU-LFS data to explore if digitalization has affected older workers employment prospects. The second analysis uses the Survey of Health, Ageing and Retirement in Europe to examine to what extent digital skills impact early retirement for workers aged 50 and above, using an instrumental variable strategy. The third analysis, utilizing the EU-SILC dataset, extends the inquiry into the influence of automation on the retirement choices of older workers across 11 European countries. The analyses suggest that digitalization and automation has not reduced employment of older workers, and occupational-level automation potential is negatively related to the likelihood of early retirement. We find the subjective self-assessed level of digital skills to have a negative effect early retirement propensity for women, but not for men. Other variables affecting the probability of entering early retirement are age, gender, educational background and job status also matter. Moreover, older workers in non-routine cognitive tasks tend to delay early retirement, while men with high digital skills show a positive impact on early retirement likelihood.