premia.<sup>22</sup> We also use firm-level average wage (discounted and averaged over 2010-2015) as a quality indicator. Finally, we also classify firms as foreign-owned if foreign ownership is above 50%. In the Hungarian context foreign ownership is a strong predictor of firm productivity, export orientation, and quality (Kaminski, 1999).

In our main empirical analysis, we restrict the sample to men and use workers aged between 52-57 (with workers aged 52-54 serving as the control group and workers aged 55-57 comprising the treatment group). We do not study the employment change of workers older than age 58 as those workers could retire before the reform, but not after the policy change due to the elimination of some early retirement options.<sup>23</sup> We restrict our sample to the non-retired population to ensure that the estimated employment effects are not driven by the aging-out of already retired individuals from our sample. Appendix Table B5 shows that the estimated employment change and the heterogeneity patterns remain similar if we include retired individuals in the sample. For the workers in our sample, the retirement age was 65 (and 64 for some older cohorts). We find no evidence that the cohorts with slightly older normal retirement age behave differently at age 52-57 so our main estimates are not driven by anticipation effects stemming from extending the retirement age.

Table 1 provides summary statistics on our data. The top panel suggests that the treatment and the control age groups are remarkably similar in terms of employment, wages and share of white collar jobs. The middle panel summarizes the distribution of treatment and control workers across high- and low-productivity firms. For each measure (except for foreign ownership), we divide firms into above-median and below-median groups, taking the median based on all private sector workers, irrespective of their age. The share of workers at high-productivity firms is very similar in the treatment and control groups. Finally, in the bottom panel we examine the industry composition of treatment and control workers. Again, we find very small differences suggesting that the treatment and the control groups are similar.

> 22To estimate the firm wage premia, we use all sample years of the linked employer-employee administrative data. We regress wages on individual and firm fixed effects, controlling for year fixed effects, age squared, age cubed, and firm size.

> 23The earliest age to retire was age 58 until 2011, but that possibility was abolished then. To retire at age 58, someone needed to have a long term employment relationship and at least 37 years of employment history. Note that all workers aged between 52 and 57 between 2012 and 2015 (our main estimation sample) could only retire at the normal retirement age, and so workers in our sample were not affected directly or indirectly through anticipation effects in our main sample. Nevertheless, workers who turned 58 before 2012 will have lower employment rate and higher retirement rate than workers who turned 58 after 2012. By restricting the treatment ages to 55-57 in our analysis we make sure our employment changes are not affected by the change in retirement rules instituted one year before our policy change.

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