Chains of Opportunity Revisited

Nicola Bianchi (Northwestern University)
Giulia Bovini (Bank of Italy)
Jin Li (University of Hong Kong)
Matteo Paradisi (Harvard University)
Michael Powell (Northwestern University)

Abstract: This paper 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 for workers. We use administrative data on Italian private-sector workers in small to medium firms and leverage 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 in firms with limited opportunities.