Career Spillovers in Internal Labour Markets

Nicola Bianchi; Giulia Bovini; Jin Li; Matteo Paradisi; Michael Powell

doi:10.1093/restud/rdac067

Career Spillovers in Internal Labour Markets

Nicola Bianchi, Giulia Bovini, Jin Li, Matteo Paradisi, Michael Powell

Strategy

Research output: Contribution to journal › Article › peer-review

8 Scopus citations

Abstract

This article studies career spillovers across workers, which arise in firms with limited promotion opportunities. We exploit a 2011 Italian pension reform that unexpectedly tightened eligibility criteria for the public pension, leading to sudden, substantial, and heterogeneous retirement delays. Using administrative data on Italian private-sector workers, the analysis leverages cross-firm variation to isolate the effect of retirement delays among soon-to-retire workers on the wage growth and promotions of their colleagues. We find evidence of spillover patterns consistent with older workers blocking the careers of their younger colleagues, but only in firms with limited promotion opportunities.

Original language	English (US)
Pages (from-to)	1800-1831
Number of pages	32
Journal	Review of Economic Studies
Volume	90
Issue number	4
DOIs	https://doi.org/10.1093/restud/rdac067
State	Published - Jul 1 2023

Funding

We thank Dan Barron, Tim Bond, Guillermo Caruana, Wouter Dessein, Michael Dinerstein, Robert Hannuna, Nathan Hendren, Guido Friebel, Ben Friedrich, Larry Katz, Eddie Lazear, Danielle Li, Niko Matouschek, Peter Orazem, Steve Pischke, Andrea Prat, Jim Rebitzer, Catherine Thomas, Paolo Sestito, Stefanie Stantcheva, and Eliana Viviano, as well as seminar participants at Columbia Business School, the CSEF-IGIER Symposium, the Empirical Management Conference, Harvard Business School, London School of Economics, the Madrid Workshop on Relational Contracts, Max Planck Institute, the MEA meeting, the NBER Summer Institute, Northwestern University, RAND Corporation, the Society for Institutional and Organizational Economics, and York University for their helpful comments. This paper subsumes “Labor Substitutability and the Impact of Raising the Retirement Age” by Bovini and Paradisi. We thank Massimo Antichi, Mariella Cozzolino, Edoardo Di Porto, and Paolo Naticchioni for help with the data. The realization of the present article was possible thanks to the sponsorship and financial support to the “VisitINPS Scholars” program. The views expressed in this article are those of the authors and are not the responsibility of INPS, the Bank of Italy, or the Eurosystem.

Keywords

Internal labour markets
J21
J26
J31
M51
M52
Pension reform
Promotions
Wage growth

ASJC Scopus subject areas

Economics and Econometrics

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

Access to Document

10.1093/restud/rdac067

Cite this

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title = "Career Spillovers in Internal Labour Markets",

abstract = "This article studies career spillovers across workers, which arise in firms with limited promotion opportunities. We exploit a 2011 Italian pension reform that unexpectedly tightened eligibility criteria for the public pension, leading to sudden, substantial, and heterogeneous retirement delays. Using administrative data on Italian private-sector workers, the analysis leverages cross-firm variation to isolate the effect of retirement delays among soon-to-retire workers on the wage growth and promotions of their colleagues. We find evidence of spillover patterns consistent with older workers blocking the careers of their younger colleagues, but only in firms with limited promotion opportunities.",

keywords = "Internal labour markets, J21, J26, J31, M51, M52, Pension reform, Promotions, Wage growth",

author = "Nicola Bianchi and Giulia Bovini and Jin Li and Matteo Paradisi and Michael Powell",

note = "Funding Information: We thank Dan Barron, Tim Bond, Guillermo Caruana, Wouter Dessein, Michael Dinerstein, Robert Hannuna, Nathan Hendren, Guido Friebel, Ben Friedrich, Larry Katz, Eddie Lazear, Danielle Li, Niko Matouschek, Peter Orazem, Steve Pischke, Andrea Prat, Jim Rebitzer, Catherine Thomas, Paolo Sestito, Stefanie Stantcheva, and Eliana Viviano, as well as seminar participants at Columbia Business School, the CSEF-IGIER Symposium, the Empirical Management Conference, Harvard Business School, London School of Economics, the Madrid Workshop on Relational Contracts, Max Planck Institute, the MEA meeting, the NBER Summer Institute, Northwestern University, RAND Corporation, the Society for Institutional and Organizational Economics, and York University for their helpful comments. This paper subsumes “Labor Substitutability and the Impact of Raising the Retirement Age” by Bovini and Paradisi. We thank Massimo Antichi, Mariella Cozzolino, Edoardo Di Porto, and Paolo Naticchioni for help with the data. The realization of the present article was possible thanks to the sponsorship and financial support to the “VisitINPS Scholars” program. The views expressed in this article are those of the authors and are not the responsibility of INPS, the Bank of Italy, or the Eurosystem. Publisher Copyright: {\textcopyright} 2022 The Author(s). Published by Oxford University Press on behalf of The Review of Economic Studies Limited.",

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doi = "10.1093/restud/rdac067",

language = "English (US)",

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AU - Bovini, Giulia

AU - Li, Jin

AU - Paradisi, Matteo

AU - Powell, Michael

N1 - Funding Information: We thank Dan Barron, Tim Bond, Guillermo Caruana, Wouter Dessein, Michael Dinerstein, Robert Hannuna, Nathan Hendren, Guido Friebel, Ben Friedrich, Larry Katz, Eddie Lazear, Danielle Li, Niko Matouschek, Peter Orazem, Steve Pischke, Andrea Prat, Jim Rebitzer, Catherine Thomas, Paolo Sestito, Stefanie Stantcheva, and Eliana Viviano, as well as seminar participants at Columbia Business School, the CSEF-IGIER Symposium, the Empirical Management Conference, Harvard Business School, London School of Economics, the Madrid Workshop on Relational Contracts, Max Planck Institute, the MEA meeting, the NBER Summer Institute, Northwestern University, RAND Corporation, the Society for Institutional and Organizational Economics, and York University for their helpful comments. This paper subsumes “Labor Substitutability and the Impact of Raising the Retirement Age” by Bovini and Paradisi. We thank Massimo Antichi, Mariella Cozzolino, Edoardo Di Porto, and Paolo Naticchioni for help with the data. The realization of the present article was possible thanks to the sponsorship and financial support to the “VisitINPS Scholars” program. The views expressed in this article are those of the authors and are not the responsibility of INPS, the Bank of Italy, or the Eurosystem. Publisher Copyright: © 2022 The Author(s). Published by Oxford University Press on behalf of The Review of Economic Studies Limited.

PY - 2023/7/1

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N2 - This article studies career spillovers across workers, which arise in firms with limited promotion opportunities. We exploit a 2011 Italian pension reform that unexpectedly tightened eligibility criteria for the public pension, leading to sudden, substantial, and heterogeneous retirement delays. Using administrative data on Italian private-sector workers, the analysis leverages cross-firm variation to isolate the effect of retirement delays among soon-to-retire workers on the wage growth and promotions of their colleagues. We find evidence of spillover patterns consistent with older workers blocking the careers of their younger colleagues, but only in firms with limited promotion opportunities.

AB - This article studies career spillovers across workers, which arise in firms with limited promotion opportunities. We exploit a 2011 Italian pension reform that unexpectedly tightened eligibility criteria for the public pension, leading to sudden, substantial, and heterogeneous retirement delays. Using administrative data on Italian private-sector workers, the analysis leverages cross-firm variation to isolate the effect of retirement delays among soon-to-retire workers on the wage growth and promotions of their colleagues. We find evidence of spillover patterns consistent with older workers blocking the careers of their younger colleagues, but only in firms with limited promotion opportunities.

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Career Spillovers in Internal Labour Markets

Abstract

Funding

Keywords

ASJC Scopus subject areas

UN SDGs

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