Career Spillovers in Internal Labor Markets

Abstract

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Workforce Aging, Pension Reforms, and Firm Outcomes

“…30 Using a different specification than we do, Bianchi et al (2020) report reductions in middle-aged workers' contractual wages in the aftermath of the reform among slower-growing, mid-size employers. When we analyze event studies for wages for our sample of larger firms, we find a qualitatively similar though imprecise reduction in wages for the middle aged.…”

“…This specification is close to the one adopted byBovini and Paradisi (2019), later subsumed inBianchi et al (2020), with the exception that the shock is equal to the total number of years of pension eligibility delay among Close To Retirement (CTR) individuals divided by total employment rather than by the number of CTRs.…”

“…The absence of negative employment effects on younger workers is in line with most of the literature looking at the possible crowding out effects generated by the labor supply shocks of specific segments of the population (female participation, migration). Using similar data and exploiting the variation in older workers employment due to the 2012 reform, but focusing on smaller firms, two papers (Boeri et al (2017) and Bovini and Paradisi (2019), later subsumed in Bianchi et al (2020)) do find a trade off between older and younger workers in the short run. Both papers estimate the impact of the 2012 reform in a DD setting at the firm level.…”

“…Both papers estimate the impact of the 2012 reform in a DD setting at the firm level. In Boeri et al (2017) the main treatment is equal to the share of 55+ workers who had to postpone retirement over all 55+ employment; in Bianchi et al (2020), it is equal to the average number of years of minimum retirement age delay for those individuals that, at the end of 2011, were at most 3 years far from being eligible to receive a public pension (defined as Close To Retirement, CTR); the treatment is divided by the number of individuals close to retirement. In both cases, the measure of the treatment is standardized by some measure of the number of individuals that were at risk of being treated.…”

“…We are aided by the fact that we study the effect of a change in employment of a group of workers, not a single individual, and hence may be more able to detect firm-level impacts. 5 A paper on worker-level outcomes related to ours is Bianchi et al (2020), who study the effect of the same reform we analyze on workers' careers within firm. They find that the rise in older workers leads to a reduction in wage growth for workers not in retirement age.…”