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Longer Careers: A Barrier to Hiring and Coworker Advancement?

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  • Ferrari, Irene

    (Ca' Foscari University of Venice)

  • Kabátek, Jan

    (University of Melbourne)

  • Morris, Todd

    (University of Queensland)

Abstract

Government policies are encouraging older workers to delay retirement, which may curb younger workers' career advancement. We study a Dutch reform that raised the retirement age by 13 months and nearly tripled employment at age 66. Using monthly linked employer-employee data, we show that affected firms delay and decrease replacement hiring, and coworkers' earnings fall via reductions in hours worked, wages, and promotions. Combined, the hiring and coworker spillovers offset most of the additional hours worked by older workers, disproportionately affect career advancement for younger workers and women, and considerably increase the policy's ratio of welfare costs to fiscal savings.

Suggested Citation

  • Ferrari, Irene & Kabátek, Jan & Morris, Todd, 2023. "Longer Careers: A Barrier to Hiring and Coworker Advancement?," IZA Discussion Papers 16098, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp16098
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    More about this item

    Keywords

    retirement reform; labor demand; internal labor markets; firms; coworker spillovers;
    All these keywords.

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • 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
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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