Pension Reform, Retirement and Jobs for the Young

Paul Bingley () and Gauthier Lanot ()
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Paul Bingley: The Danish Centre for Social Science Research, Postal: Herluf Trolles Gade 11,, 1052 Copenhagen K, Denmark
Gauthier Lanot: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden, https://www.umu.se/handelshogskolan

No 1038, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: The age structure of employment reflects the relative prices of retaining workers of different ages, and early pension benefits encourage workers to retire before the normal pensionable age, yet little is known about the effects on employment of the young. Using a Danish pension reform, we analyse the relationship between the wages and employment of workers of different ages at the firm level. We find that the reform affected the retirement ages of workers with basic skills – those with the lowest wages and the highest replacement rates post-reform. We estimate the elasticity of substitution between young and old basic skilled workers to be unity; they are perfect substitutes.

Keywords: Pensions; Retirement; Elasticity of Substitution; Instrumental Variables (search for similar items in EconPapers)
JEL-codes: I12 I29 J13 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2025-10-03
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