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08.01.2024

Late-in-life investments in human capital: evidence on the (unintended) effects of a pension reform

verfasst von: Simone Chinetti

Erschienen in: Empirical Economics | Ausgabe 6/2024

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Abstract

This paper studies whether forced increases in the residual working life, determined by a restrictive pension reform, induce additional training activities. By exploiting a sizable Italian pension reform, in a difference-in-differences setting, I find that a lengthening of the working horizon increases, through training, workers’ human capital. Additionally, I show that the response to the reform appears very heterogeneous and depends on gender, age, education, marital status, sector of employment and firm size. My estimates suggest, furthermore, that these individual positive effects are not attributable to employers’ sponsorship.

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Fußnoten
1
For an overview of the Italian training system, see Appendix A.
 
2
The focus in this paper is on formal on-the-job training, but the data I exploit does not allow me to discern between general or specific training investment.
 
3
For the sake of clarity, the information on whether the firms directly finance training is not required as I focus on the effect of a longer working horizon on training investment and not on the incidence of the human capital investment at the firm level.
 
4
A further connection of this paper is with the literature studying how the characteristics of social security systems, specifically legal retirement age (Manoli and Weber 2016; Lalive and Staubli 2015; Staubli and Zweimüller 2013; Mastrobuoni 2009) and pension benefit rules (Liebman et al. 2009; Krueger and Pischke 1992), affect agents’ behaviours.
 
5
For an overview of the Italian pension system, see Appendix B.
 
6
Although the pension reform was the central component of the decree, other measures were legislated to increase taxation on real estate, cars, and consumption. The whole text of the law can be accessed at https://​www.​gazzettaufficial​e.​it/​gunewsletter/​dettaglio.​jsp?​service=​1 &​datagu=​2011-12-06 &​task=​dettaglio &​numgu=​284 &​redaz=​011G0247 &​tmstp=​1323252589195 Decreto Salva Italia, Gazzetta Ufficiale.
 
7
Fornero (2015) provides an exhaustive account of the Italian situation during Autumn 2011 and a detailed technical description of the 2011 pension reform.
 
8
See Appendix E for the evolution of the effective retirement age after the 2011 pension reform.
 
9
For a brief discussion of other grandfathering clauses and other provisions of the 2011 pension reform, please see Appendices F and G.
 
10
The reform allowed all individuals to retire at 70, as long as they have accrued at least 5 years of paid contribution.
 
11
The 2017 data is the last available survey’s wave. Moreover, even though the PLUS data has a longitudinal structure, the panel component is very short (about less than 3000 individuals, while those in my sample are 258, that is the 0.4% of the sample). For other information on the sample selection, please refer to Appendix H.
 
12
Bianchi et al. (2019) exploiting Social Security Records from Italy show that the median annual contribution is 52 weeks, and the average is 45 weeks.
 
13
I also take into account that the reform abolished the “waiting window”, a rule whereby the first pension instalment could be collected only 12 months after becoming eligible for either type of pension. Unfortunately, the 2017 PLUS wave misses information on retirees’ accrued years of contribution.
 
14
Other papers study the effects of the 2011 pension reform using as identification of the policy-induced shock similar versions to that one I am exploiting in this paper. Prominent examples are: Bianchi et al. (2019), Bertoni and Brunello (2021), Bovini and Paradisi (2019), Boeri et al. (2017), Carta and De Philippis (2023) and Carta et al. (2019).
 
15
Unfortunately, data on type of course chosen and the number of hours spent per activity are not always available. However, evidence suggests that it is more the incidence of a training spell than its duration that is relevant (Pischke 2001).
 
16
Unfortunately, the Difference-in-Differences approach with a continuous treatment variable proposed by Callaway et al. (2021) is unfeasible in my setting. As the authors argue, correctly identifying the causal effect with dosage requires a control group that remains untreated or a comparison of late vs. early treated groups. However, with the introduction of the pension reform, the minimum retirement age (MRA) increased immediately for all workers who did not qualify for a public pension by the end of 2011. Indeed, all individuals in my sample are ineligible for retirement both before and after the 2011 pension reform and, as a result, are fully subject to the new pension rules. Due to the reform’s effects, they experience increases in their residual working horizon, ranging from a minimum of 2 to a maximum of 7 years. This means there is no control group (i.e. no never-treated units) or late-treated group for comparison (i.e. no staggered timing). Despite these limitations, my findings can still provide valuable insights into how the outcome responds to changes in the dose. Furthermore, I also rely on different specifications where I introduce dummies for different treatment intensities interacted with the post-reform dummy and estimates by year (i.e. in 2013, 2015 and 2017 separately) interacted with the shock treatment variable (estimates are not reported). Both deliver consistent evidence with that obtained using Eq. (1). In the first case, the estimates suggest that the higher the MRA increase, the higher training participation (even for relatively small working horizon increases). The specification with estimates by year suggests that the results are positive and statistically significant in almost all post-reform years and very similar to those obtained using Eq. (2).
 
17
The existing literature has only investigated the impact of pension reforms on training incidence focusing on men because women are less likely to be the main wage earner and more often have disrupted careers than men.
 
18
I consider those who declare themselves as single, divorced or widows as not married women.
 
19
Please see Appendix D for a earlier intervention to curb pension expenditures.
 
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Metadaten
Titel
Late-in-life investments in human capital: evidence on the (unintended) effects of a pension reform
verfasst von
Simone Chinetti
Publikationsdatum
08.01.2024
Verlag
Springer Berlin Heidelberg
Erschienen in
Empirical Economics / Ausgabe 6/2024
Print ISSN: 0377-7332
Elektronische ISSN: 1435-8921
DOI
https://doi.org/10.1007/s00181-023-02538-z

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