Workforce Aging, Pension Reforms, and Firm Outcomes

56 Pages Posted: 1 Feb 2021 Last revised: 13 Feb 2022

See all articles by Francesca Carta

Francesca Carta

Bank of Italy

Francesco D’Amuri

Bank of Italy

Till Von Wachter

University of California, Los Angeles (UCLA) - Department of Economics

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Date Written: January 2021

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.

Suggested Citation

Carta, Francesca and D’Amuri, Francesco and Von Wachter, Till, Workforce Aging, Pension Reforms, and Firm Outcomes (January 2021). NBER Working Paper No. w28407, Available at SSRN: https://ssrn.com/abstract=3776976

Francesca Carta (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Francesco D’Amuri

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

Till Von Wachter

University of California, Los Angeles (UCLA) - Department of Economics ( email )

8283 Bunche Hall
Los Angeles, CA 90095-1477
United States

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