Crowded Career Ladders? Intra-Firm Spillovers of Raised Retirement Age

Sona Badalyan

CERGE-EI Working Papers from The Center for Economic Research and Graduate Education - Economics Institute, Prague

Abstract: I study how delayed retirements reshape firms’ internal labor markets, leveraging a German reform that raised women’s early retirement age by at least three years. The reform increased retention of older women and reduced both internal promotions and external hiring of younger coworkers, with the greatest losses among middle-aged workers who were near to older workers on the career ladder. Spillovers are structured: promotion crowd-outs arise in thick internal labor markets with intense competition, while hiring declines are largest in thin external markets with high turnover costs. Crowd-out effects concentrate within jobcells, whereas coworkers in different jobcells can benefit when retained older workers possess specific human capital. Taken together, the evidence supports slot-constraint theories—augmented by firm-specific human-capital mechanisms.

Keywords: aging; internal labor markets; human capital; worker substitutability (search for similar items in EconPapers)
JEL-codes: H55 J21 J23 J24 J26 J31 J63 M51 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-lma
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