As individuals live longer, governments and employers are considering raising the age at which individuals qualify for public or private retirement benefits such as Social Security. Why the financial implications of changing retirement age are well-studied, but labor market and health outcomes are less well understood.
A paper by Serrano-Alarcon et al. (2023) The impact of the Italian pension reform is studied. Italy has a public pension system that is funded using a (pay-as-you-go) mechanism. The income replacement rate has historically been 77%. The 2012 pension reform increased the retirement age to 67 for all individuals. This policy resulted in an increase in the retirement age for women by 7 years (60-67 years) and for women by 2 years (65-67 years). man.
The authors use data from the WHIP – Health Based Italian Work History Panel (WHIP), a personal work history database derived from a random sample of persons insured by the Italian Social Security Institute (INPS). WHIP-Health data are then linked to public and private hospital discharge data from the National Discharge Archives. The authors’ empirical strategy compares adjacent groups that are differentially affected by reforms due to an increase in the statutory pension age (pension). For example, “women born in 1951 can retire according to the statutory retirement age by the age of 60 in 2011…[but] Women born in 1952 will only be eligible for pensions when they turn 63 in 2015 at the earliest. “
Using this approach, the authors found:
Aiming only at women, the reform also increases sick days and hospitalizations related to mental health and injuries. These effects are driven by women with previously poor health, suggesting that indiscriminate and sudden increases in pension ages may harm more disadvantaged workers. Consistent with the modest tightening of the retirement age for men, the labor market response was smaller and they did not suffer any significant health effects.
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