Career Spillovers in Internal Labor Markets
70 Pages Posted: 26 Oct 2019 Last revised: 4 May 2020
Date Written: August 12, 2019
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. These effects are present only in firms with limited promotion opportunities.
Keywords: wage growth, promotions, internal labor markets, pension reform
JEL Classification: M51, M52, J21, J26, J31
Suggested Citation: Suggested Citation