Luca Salerno

I am an applied labor economist working on the economics of aging. My research asks how pension reforms change when people retire, and what that does to their coworkers, their health, and the distribution of income and wealth.

In my job market paper I use Italian social security records to test whether letting older workers retire earlier opens jobs and careers for younger ones. Other work uses survey data from SHARE and the German Socio-Economic Panel, much of it within the NBER International Social Security Project.

Job market paper

How does reducing the retirement age affect younger workers? Evidence from Italy’s Quota 100

Work in progress

Lowering the retirement age is often defended with the claim that older workers who leave make room for younger ones. I test this claim inside firms using Italy’s 2019 Quota 100 reform and administrative records that cover every worker’s full contribution history. Firms replace part of the retirees, mostly with outside hires aged 35 or older, while hiring and careers of younger workers do not respond.

Data: INPS matched employer–employee records and contribution histories

Working papers

Short-time employment aid during the Covid-19 lockdown: Short- and long-run effectiveness

with Axel Börsch-Supan, Diana López-Falcón and Johannes Rausch

Revise and resubmit, Applied Economics

During the Covid-19 pandemic many European governments paid short-time employment aid to protect jobs and incomes. Using the SHARE Corona Surveys of 2020 and 2021, we study who among workers aged 50 and older received this aid and how recipients fared. Aid was widespread, and its targeting improved from 2020 to 2021. In the longer run, however, recipients were more likely to become unemployed, be furloughed or close their business.

Data: SHARE Corona Surveys 1 and 2

NBER Working Paper 32760

Bar chart by country of the share of respondents with unstable employment in 2020 and 2021; across all SHARE countries about 20 percent in 2020 and 11 percent in 2021. — Share of respondents whose employment became unstable (unemployed, furloughed or business closed), by country: from the outbreak to summer 2020 (dark) and from summer 2020 to summer 2021 (light). 95% confidence intervals.

Health inequality in Germany

with Axel Börsch-Supan, Frederik Fetzer and Johannes Rausch

NBER International Social Security Project, Phase 12

Lower pension benefits and later retirement ages may harm the health of poorer retirees more than that of richer ones. We ask whether Germany’s pension reforms since the 1980s widened health inequality among older people. Using SHARE data from 2004 to 2022, five health measures (functional, diagnosed, comprehensive, mental and cognitive health) and three ways of measuring inequality, we find no systematic increase in health inequality over the period.

Data: SHARE Waves 1–9

NBER chapter

Line chart of the income-related concentration index for five health measures across SHARE waves from 2004 to 2021/22. All values are below zero, meaning worse health among lower incomes. Functional, comprehensive, mental and cognitive health show no trend; diagnosed health drifts down within a wide confidence band. — Income-related concentration index for five health measures, SHARE waves 2004 to 2021/22. Values below zero mean that poor health is concentrated among lower incomes; lower values mean more inequality. Shaded: 95% confidence band for diagnosed health, the only measure that is not flat.

Publications

Pension reforms and inequality in Germany: Micro-modelling

with Axel Börsch-Supan and Johannes Rausch

In A. Börsch-Supan and C. Coile (eds.), Social Security Programs and Retirement around the World: The Effects of Pension Reforms on the Income Distribution of Retirees. University of Chicago Press, forthcoming.

Forthcoming

Since the 1980s German pension reforms have cut benefit generosity and raised the retirement age. We ask whether they increased inequality among retirees. Using the German Socio-Economic Panel, we simulate how the distributions of pension income and social security wealth would have developed without the reforms. The reforms raised inequality in social security wealth in the 1990s and lowered it after 2000, mainly because social assistance puts a floor under low benefits. The behavioural response through changed retirement timing is statistically significant but economically small.

Data: SOEP v37, 1984–2020

NBER Working Paper 32796

Line chart from 1985 to 2013 of the change in the Gini coefficient of social security wealth due to the reforms: all reforms together raise it by about 0.01 in the 1990s and lower it by about 0.02 by 2013. — Effect of the reforms on the Gini coefficient of social security wealth at age 63, for all reforms together and for single reforms, relative to a counterfactual without them. Positive values: the reform increased inequality.

Long-run health trends in Europe

with Axel Börsch-Supan and Irene Ferrari

The Journal of the Economics of Ageing 18 (2021), 100303.

Published

Health has been worsening for middle-aged baby boomers in the US, while a prominent study found steadily improving health across European birth cohorts. We show that this result rests on four health items that SHARE stopped asking in later waves, which makes younger cohorts look healthier than they are. With a deficit index built only from items asked in every wave, the improvement in health has all but stalled for Europeans born after about 1950. The result holds across 1,000 randomly drawn alternative indices.

Data: SHARE Waves 1–6

Journal version

Two panels, women and men: health deficits by year of birth from 1918 to 1964 for two indices; the original index keeps falling for cohorts born after 1950, the all-waves index flattens out. — Health deficits by year of birth relative to the 1950 cohort, women (left) and men (right). Blue: the original 38-item index; red: only items asked in all waves. Shaded: 95% confidence intervals.