“Chains of Opportunity Revisited” by Dr. Michael Powell
Dr. Michael Powell
Kellogg School of Management
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 across-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.