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The files from this folder allow to replicate all tables and figures of the main text and online appendices of the article “The forward-looking effect of increasing the full retirement age” by Francesca Carta and Marta De Philippis.

This paper studies the long term consequences on workers' labour earnings of the credit crunch induced by the 2007-2008 financial crisis. We study the evolution of both employment and wages in a large sample of Italian workers followed for nine years after the start of the crisis. We rely on a unique matched bank-employer-employee administrative dataset to construct a firm-specific shock to credit supply, which identifies firms that, because of the collapse of the interbank market during the financial crisis, were unexpectedly aected by credit restrictions. We find that workers who were employed before the crisis in firms more exposed to the credit crunch experience persistent and sizable earnings losses, mainly due to a permanent drop in days worked. These effects are heterogeneous across workers, with high-type workers being more affected in the long run. Moreover, firms operating in areas with favorable labor market conditions react to the credit shock by hoarding high-type workers and displacing low-type ones. Under unfavorable labor market conditions instead, firms select to displace also high-type (and therefore more expensive) workers, even though wages do react to the slack. All in all, our results document persistent eects on the earnings distribution.

This paper studies the contribution of parental influence in accounting for cross-country gaps in human capital achievements. We argue that the cross-country variation in unobserved parental characteristics is at least as important as the one in commonly used observable proxies of parental socio-economic background. We infer this through an indirect empirical approach, based on the comparison of the school performance of second generation immigrants. We document that, within the same host country or even the same school, students whose parents come from high-scoring countries in the PISA test do better than their peers with similar socioeconomic backgrounds. Differential selection into emigration does not explain this finding. The result is larger when parents have little education and have recently emigrated, suggesting the importance of country-specific cultural traits that parents progressively lose as they integrate in the new host country, rather than of an intergenerational transmission of education quality. Unobserved parental characteristics account for about 15% of the cross-country variance in test scores, roughly doubling the overall contribution of parental influence.

Aggregate wages display little cyclicality compared to what a standard model would predict. Wage rigidities are an obvious candidate but a recent strand of the literature has emphasized the need to take into account the growing importance of worker composition effects during downturns. With reference to the Italian case we document that also firm composition effects increasingly matter in explaining the aggregate wage dynamics, i.e. aggregate wage growth has been lifted up by the increase in the employment weight of high wage firms. To the extent that this reallocation occurs towards more productive firms, the composition effects may also reflect an efficiency enhancing mechanism. We use a newly available dataset based on social security records covering the universe of Italian employers be-tween 1990 and 2013 and employ a standard measure of allocative efficiency on wages paid across firms. We show that this measure has improved over time since prior to the recent downturn and that it is aligned, at the sectoral level, with measures of productivity growth and market openness to competition. We then focus on the recent downturn and find that large firms were able to adjust wages more than small firms, and that small firms instead adjusted employment to a larger extent. Finally, we document that the continued improvement in the measure of allocative efficiency over this period correlates positively with measures of economic activity (evolution of employment and value added) across sectors.

Increasing the number of Science, Technology, Engineering and Math (STEM) university graduates is considered a key element for long-term productivity and competitiveness in the global economy. Still, little is known about what actually drives and shapes students' choices. This paper focusses on secondary school students at the very top of the ability distribution and explores the effect of more exposure to science on enrolment and persistence in STEM degrees at the university and on the quality of the university attended. The paper overcomes the standard endogeneity problems by exploiting the different timing in the implementation of a reform that induced secondary schools in the UK to offer more science to high ability 14 year-old children. Taking more science in secondary school increases the probability of enrolling in a STEM degree by 1.5 percentage point and the probability of graduating in these degrees by 3 percentage points. The results mask substantial gender heterogeneity: while girls are as willing as boys to take advanced science in secondary school - when offered -, the effect on STEM degrees is entirely driven by boys. Girls are induced to choose more challenging subjects, but still the most female-dominated ones.

Results from international standardized tests show large cross-country differences in students’ performances. Where do these gaps come from? This paper argues that differences in cultural environments and parental inputs may be of great importance. We show that the school performance of second generation immigrants is closely related with the one of native students in their parents’ countries of origin. This holds true even after accounting for different family background characteristics, schools attended and selection into immigration. We quantify the overall contribution of various parental inputs to the observed cross-country differences in the PISA test performance, and show that they account for about 40% of the gap between East Asia and other regions. This pattern questions whether PISA scores should be interpreted only as a quality measure for a country’s educational system. They actually contain an important intergenerational and cultural component.

We use a new dataset and a novel identification strategy to analyze the effects of residential segregation on the employment of migrants in 8 Italian cities. Our data, which are representative of the population of both legal and illegal migrants, allow us to measure segregation at the very local level (the block) and include measures of house prices, commuting costs and migrants' linguistic ability. We find evidence that migrants who reside in areas with a high concentration of non-Italians are less likely to be employed compared to similar migrants who reside in less segregated areas. In our preferred specification, a 10 percentage points increase in residential segregation reduces the probability of being employed by 7 percentage points or about 8% over the average. Additionally, we also show that this effect emerges only above a critical threshold of 15-20% of migrants over the total local population, below which there is no statistically detectable effect. The negative externality associated with residential segregation arises only for the employment prospects of immigrants, whether legal or illegal. We do not find evidence of either spatial mismatch or skill bias as potential explanations of this effect. Statistical discrimination by native employers is the remaining suspect.