Most research on retirement asks a simple question: when do people choose to stop working, and why? In the newest episode of Talking Economics Emerging Scholars, CERGE-EI job market candidate Sona Badalyan takes a different angle. She looks at raised retirement age as something that also happens to firms and coworkers—a change that can ripple through promotions, hiring, and peer effects.
As Sona explains, delayed retirement is not only a personal decision; it can be a workplace shock. When older employees stay longer, it may reshape opportunities for others: promotions can slow, external hiring can decline, and the “next in line” may suddenly find the line moving much more slowly.
What are “crowded career ladders”?
Sona’s job market paper focuses on what she calls crowded career ladders—bottlenecks that can appear when older workers remain in their positions longer after a policy change. In her research, she studies a reform that raised women’s early retirement age by at least three years, and asks: What happens inside firms when retirement is delayed?
A key explanation she highlights is slot constraints. Put simply, many organizations have a limited number of positions at each level. If fewer senior roles open up, it can become more difficult to promote others or create space for new external hires. In the data, Sona finds patterns consistent with this idea: increased retention of older workers is closely mirrored by combined declines in promotion and hiring.
Who feels the bottleneck most?
One of Sona’s findings is that middle-aged workers are more crowded out than younger workers. The reason is intuitive: they are often closer substitutes for older workers and are typically the ones closest in line to advancement on the career ladders—so they are most exposed when promotions slow down.
She also finds that these “crowding out” effects show up primarily within occupations of older workers, where workers compete directly for the same roles. Across occupations, on average, the effect is insignificant—an important detail that helps narrow down what’s driving the pattern.
Not all effects are negative
The conversation also makes space for nuance. Delayed retirement can create bottlenecks, but Sona finds that it can also bring benefits to some coworkers. Across occupations, older workers may provide valuable, job-specific know-how that supports colleagues in other roles—suggesting complementarities across occupations, not just competition.
A helpful way she describes it is through an internal “pyramid” of workers in the firm: not only the width (how many people compete for a limited number of roles) matters, but also the height, which can reflect the value of accumulated, firm-specific skills. In settings where that specialized knowledge is especially important, retaining experienced workers can help preserve human capital and support performance in other parts of the organization.
Why do firms keep some older workers longer?
Sona also discusses her related work that zooms in on retention itself: which older workers are most likely to stay after reforms, and why. Her research points to organizational structure and turnover costs—especially in situations where firms have fewer internal substitutes in the occupations of these older workers or where it’s more difficult to hire replacements for given occupations locally. In other words, retention of older workers in response to a raised retirement age is not uniform: it is shaped by how easy (or difficult) it is to replace skills and experience.
Overall, the takeaway of these studies is that not all older workers are a burden to the firms; their retention can help the reforms to preserve the specific human capital and decrease the turnover costs, and in some cases even help coworkers across occupations.
Retirement is social, too
A particularly intriguing part of the episode looks beyond incentives and organizational structure to something more human: peer effects and social norms. Sona explains that policy changes don’t only change financial trade-offs—they can also shift expectations and behavior through workplace networks. Older workers may perceive the behavior of their peers as a reference point for their own behavior, leading to peer effects in old-age employment. In the reform she studied, women’s retirement ages became gender neutral, which changed how late-life employment of women was perceived in the labor market. She tests for conformity, information channel, and work complementarities, explaining these peer effects.
Her takeaway is memorable: policies can spread socially, and peer behavior can amplify their impact—an intuitive channel that is easy to overlook.
Listen to the episode
To hear Sona’s full story and the ideas behind her research, listen to the episode on Spotify, Apple Podcasts, or YouTube.
Sona is an applied microeconomist with interests in labor, public, and personnel economics. Her job market paper examines internal labor markets, exploring how firm organization, labor market institutions, and frictions shape outcomes for workers and firms in an aging economy. During her PhD studies, Sona visited the University of Chicago, completed a PhD internship at the Dutch National Bank, and worked as a research associate at the Institute for Employment Research. In 2024, she was awarded second prize in the Young Economist of the Year competition organized by the Czech Economic Society, as well as first prize at the Young Economists Seminar organized by the Croatian National Bank.
