workforce aging, pension reforms, and firm outcomes

Francesca Carta, Francesco D'Amuri and Till von Wachter (tvwachter@econ.ucla.edu)
Additional contact information
Till von Wachter: University of California Los Angeles

No 1297, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: Raising statutory retirement ages has been a popular policy to increase the labor supply of older workers in the face of population aging. In this paper, we quantify the effect of a sharp and unexpected increase in retirement ages on firms’ input mix and economic outcomes using Italian administrative and survey data on employment, wages, value added and capital. Exploiting information on lifetime pension contributions for the universe of employees, we are able to quantify the extra number of older workers employed by each firm as a result of the reform. We find that a 10 per cent increase in older workers implies a rise in employment of young and middle-aged workers of 1.8 per cent and 1.3 per cent, respectively. Total labor costs and value added increase broadly in line with employment, with little impact on labor productivity and unit labor costs. These results suggest older workers are valuable to employers and that pension reforms postponing retirement can remove a constraint rather than place a burden on firms.

Keywords: pension reform; wages; firms and labor market outcomes (search for similar items in EconPapers)
JEL-codes: H55 J24 J26 (search for similar items in EconPapers)
Date: 2020-09
New Economics Papers: this item is included in nep-age, nep-eur, nep-lma and nep-ore
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Workforce Aging, Pension Reforms, and Firm Outcomes (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bdi:wptemi:td_1297_20

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