Does a Longer Work Horizon Affect Offsprings' Labour Market Outcomes?

Abstract

AbstractThis paper studies the effect of an increase in the work horizon of middle aged workers on the school-work transition of their offsprings aged 15–29 years. I exploit the variation in the parental work horizon induced by the 2012 Fornero reform in Italy that abruptly changed the age and years of social security contribution requirements for pension eligibility. Utilising a difference-in-difference strategy in a multi-valued treatment setting, the study shows that the reform-induced increase in the work horizon of mothers caused an increase in the probability of their offsprings seeking their first job and a decrease in these offsprings’ probability of being a student. This effect is higher among offsprings who are male, those aged 15–21, those with mothers without a University degree and those in southern Italy. Fathers did not significantly affect the student status or any labour market outcomes of their offsprings. Mechanisms behind these findings include the longer reform-induced work horizon for mothers vs. fathers, and the consequent positive effect on mothers’ lifetime earnings.