This paper studies how labor demand factors—specifically worker substitutability and
job‑specific skills—shape employment responses to a rise in the early retirement age. Using
a regression discontinuity design, I exploit a 1999 German reform that eliminated the option
for women to retire at age 60. Before the reform, older workers could exit voluntarily,
thereby imposing turnover costs on firms. Afterward, firms were better able to retain less
substitutable workers for whom turnover costs are higher. At the same time, the loss of
early pension eligibility reduced workers’ outside options, allowing firms to offer lower
wages, often through partial retirement.
IAB-Discussion Paper 13/2025: Peer Effects in Old‑Age Employment Among Women
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