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In medio stat victus: Labor Demand Effects of an Increase in the Retirement Age

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  • Tito Boeri

    (Bocconi University)

  • Pietro Garibaldi

    (University of Torino)

  • Espen R. Moen

    (Norwegian Business School)

Abstract

After falling for four decades, statutory retirement ages are increasing in most OECD countries. The labor market adjustment to these reforms has not yet been thoroughly investigated by the literature. We draw on a major pension reform that took place in Italy in December 2011 that increased the retirement age by up to six years for some categories of workers. We have access to a unique dataset validated by the Italian social security administration (INPS), which identifies in each private firm, based on an administrative exam of eligibility conditions, how many workers were locked in by the sudden increase in the retirement age, and for how long. We find that firms mostly affected by the lock in are those that were downsizing even before the policy shock. The increase in the retirement age seems to displace more middle-aged workers than young workers. Furthermore, there is not a one-to-one increase in the number of older workers in the firms where some workers were locked in by the reform. We provide tentative explanations for these results, based on the interaction between retirement, employment protection legislation and liquidity constraints of firms.

Suggested Citation

  • Tito Boeri & Pietro Garibaldi & Espen R. Moen, 2022. "In medio stat victus: Labor Demand Effects of an Increase in the Retirement Age," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(2), pages 519-556, April.
  • Handle: RePEc:spr:jopoec:v:35:y:2022:i:2:d:10.1007_s00148-021-00871-0
    DOI: 10.1007/s00148-021-00871-0
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    References listed on IDEAS

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    More about this item

    Keywords

    Early retirement; Substitution and scale effects; Lock in;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies

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