The unequal impact of raising the retirement age: Employment response and program substitution

Abstract Using high-frequency Italian administrative data, the author studies heterogeneous effects of a reform raising normal retirement age (NRA) from 60 years to 65 for private-sector male employees. The analysis, based on difference-in-differences (DD) method, shows that NRA raise reduces pension benefit claims but does not lead one-to-one increase in employment rate since workers also apply more disability and unemployment benefits. Moreover, most them simply retire without any benefit. extent varies substantially across socio-economic groups, as individuals with poorer health, lower occupational grades pay levels are constrained by reform, experiencing highest delay claims, employment, inactivity. All all, this paper could have unintended it affects negatively vulnerable labor market.