Working Paper: NBER ID: w28605
Authors: Nicola Bianchi; Giulia Bovini; Jin Li; Matteo Paradisi; Michael L. Powell
Abstract: This paper studies career spillovers across workers, which arise in firms with limited promotion opportunities. We exploit a 2011 Italian pension reform that unexpectedly tightened eligibility criteria for the public pension, leading to sudden, substantial, and heterogeneous retirement delays. Using administrative data on Italian private-sector workers, the analysis leverages cross-firm variation to isolate the effect of retirement delays among soon-to-retire workers on the wage growth and promotions of their colleagues. We find evidence of spillover patterns consistent with older workers blocking the careers of their younger colleagues, but only in firms with limited promotion opportunities.
Keywords: career spillovers; internal labor markets; pension reform; retirement delays; wage growth
JEL Codes: J21; J26; J31; M51; M52
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| longer retirement delays among older workers (J26) | significant decreases in wage growth for younger colleagues (J31) |
| one-year increase in average retirement delay among close-to-retirement workers (J26) | 25% decrease in wage growth of younger workers (J39) |
| retirement delays among older workers (J26) | negative impact on younger workers' career progressions (J62) |
| higher proportion of workers nearing retirement (J26) | more pronounced career spillovers for younger workers (J29) |
| older worker delaying retirement holding a higher-level position (J26) | blocking effect on younger workers' career progressions (J62) |
| retirement delays (J26) | 10% increase in layoffs (J63) |
| retirement delays (J26) | 2% reduction in hiring (J63) |