January 2023

IZA DP No. 15871: Pension Reforms, Longer Working Horizons and Absence from Work

Using matched employer-employee data for Italy and newly available information on sick leaves certificates, we study the effect of an exogenous increase in the length of the residual work horizon – triggered by a pension reform that increased minimum retirement age - on middle-aged employees' absence from work due to sick leaves. We find that this effect is positive for females and negative for males. After excluding health as a plausible mechanism, we argue that the intertemporal substitution of leisure prevailed on the fear of job loss for females, while the opposite happened to males. Sick leaves increased only for females working in firms paying smaller wage premia to female than to male workers, suggesting that, in these firms, females exchange lower pay with higher flexibility in their work schedule.