Working Paper: NBER ID: w28407
Authors: Francesca Carta; Francesco Damuri; Till M. von Wachter
Abstract: This paper quantifies the effect of a policy-induced sharp increase in retirement ages on input mix and economic outcomes of firms using Italian matched worker-firm data. Data on lifetime pension contributions are used to calculate the expected additional number of older workers employed by each firm due to the reform. Resulting instrumental variable estimates show an increase in older workers leads to a precisely estimated rise in employment of younger workers, value added, and total labor costs at constant labor productivity and unit labor costs. The findings suggest rising institutional retirement ages can help firms to retain valuable older employees.
Keywords: Workforce Aging; Pension Reforms; Firm Outcomes; Labor Economics
JEL Codes: H55; J23; J26
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| exogenous increase in the number of older workers (J26) | firm outcomes (G32) |
| 10% increase in older workers (J26) | 18% increase in employment of younger workers (J29) |
| 10% increase in older workers (J26) | 13% increase in employment of middle-aged workers (J29) |
| increase in older workers (J26) | total labor costs increase (J39) |
| increase in older workers (J26) | value added increase (O49) |
| increase in older workers (J26) | unchanged labor costs per worker (J39) |
| increase in older workers (J26) | unchanged value added per worker (J39) |
| increase in older workers (J26) | no significant effect on wages for any age group (J39) |