Old before their time: the role of employers in retirement decisions

Piera Bello () and Vincenzo Galasso

International Tax and Public Finance, 2020, vol. 27, issue 5, No 6, 1198-1223

Abstract: Abstract Do elderly workers retire early voluntarily, or are they induced to retire by their employers? We consider an exogenous shock due to a trade agreement between Switzerland and the EU—the mutual recognition agreement (MRA), which improved access to the EU market for Swiss firms. A vast literature suggests that these trade liberalization episodes lead firms to relocate and to innovate in order to increase productivity. This may lead to lower demand of skill obsolescent elderly workers and to higher demand of skilled workers. We use a difference in differences approach on Swiss Labor Force Survey data to compare early retirement behavior in treated MRA and control (non-MRA) industries in three periods (pre-liberalization, announcement, and implementation). We find an increase in early retirement in the MRA sector during the announcement period, which is stronger for larger firms, for exporting firms and for firms with a large age wage gap. We also find an increase in the share of graduates in all age groups. Wages are largely unaffected.

Keywords: Early retirement; Firms restructuring; Labor demand of elderly workers (search for similar items in EconPapers)
JEL-codes: H55 J14 J23 J26 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Working Paper: Old Before their Time: The Role of Employers in Retirement Decisions (2015)
Working Paper: Old before their time: The role of employers in retirement decisions (2015)
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DOI: 10.1007/s10797-020-09593-7

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