Technology Adoption over the Life Cycle and Aggregate Technological Progress

A model is studied with exogenously occurring technological progress and endogenous adoption of it. Individuals with N-period lives optimally allocate their time between leisure, work and adoption of new technology. It is shown that optimal behavior is characterized by a sequence of 4 phases of life, which, described in their order of occurrence, are: 1. adoption only (schooling), 2. work and adoption (career path), 3. work but no adoption (end-of-work-life easing) and 4. not work or adoption (retirement). The model implies that older workers will appear more productive because each hour of non-leisure time will be devoted entirely to productive work, rather than being divided between work and technology adoption time.