Pension benefit reform and the substitution of older for younger workers
2014 (English)Conference paper, Abstract (Refereed)
Early pension benefits encourage workers to retire before normal pensionable age. The age structure ofemployment reflects the relative prices of retaining workers of different ages. We use a recent reform to pension benefits in Denmark to analyze the relationship between the wages and employment of workers ofdifferent ages at the firm level. We find that the reform changed retirement ages of unskilled workers – the group with lowest wages and largest replacement rate changes due to the reform. This provides instrumental variables by which to identify parameters of a CES production function. For this group of unskilled workers we are able to estimate the elasticity of substitution between old and young at the firm level to be unity – they are perfect substitutes.
Place, publisher, year, edition, pages
Research subject Economics
IdentifiersURN: urn:nbn:se:umu:diva-92506OAI: oai:DiVA.org:umu-92506DiVA: diva2:741075
Econometric Society European Meeting