Todd Morris, Max Planck Institute for Social Law and Social Policy - Delaying retirement: How are firms and coworkers affected?

Title: Delaying retirement: How are firms and coworkers affected?
(with Irene Ferrari and Jan Kabátek)

Abstract: The share of older workers in the labor force has increased markedly over recent decades, yet the effects of this demographic shift on firms and younger workers are not well understood. In this study, we estimate the causal effects of raising older workers' labor force attachment, exploiting stepwise increases in the Statutory Retirement Age (SRA) in the Netherlands. Using linked employer-employee data, we find that raising the SRA increases the job retention of older workers, making them twice as likely to remain employed up to the new SRA threshold. Preliminary findings suggest that affected firms respond by temporarily decreasing hiring, and these effects are only partially offset later. Firms' overall labor costs increase, since the decrease in hiring does not offset the cost of retaining older workers. For affected coworkers, we do not find any effect on their separation rates from firms, but there is suggestive evidence of delayed earnings growth.

Presenter: Todd Morris, Max Planck Institute for Social Law and Social Policy

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