Pension reforms, longer working horizons, and absence from work

Using matched employer-employee data for Italy and newly available information on sick leave 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. We explain these results by arguing that the intertemporal substitution of leisure prevailed over the fear of job loss for females, while the opposite happened to males. Sick leaves increased only for females working in firms that pay smaller wage premia to female workers than to males, suggesting that, in these firms, females exchange lower pay for higher flexibility in their work schedule.