Taxation of early retirement windows and delaying retirement: The French experience
AbstractThis paper investigates the effect of the 2003 French pension reform on hiring, firing and employment rates among older workers. This reform increased the mandatory retirement age and simultaneously it set a tax levied on early retirement windows paid by firms to their older workers, to encourage them to leave their job early. We use a matching model with endogenous job destruction extended to account for a mandatory retirement age and we calibrate the model with data drawn from the French Labor Force Surveys for the years 2002 and 2003. We show that in the case of a high tax rate, delaying retirement raises job separation rates, which partially offsets its positive effect on job finding rates. Consequently, the combination of an increase in the retirement age and a taxation on early retirement windows may have negative effects on the employment rate among older workers.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 28 (2011)
Issue (Month): 5 (September)
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Web page: http://www.elsevier.com/locate/inca/30411
Delaying retirement Early retirement windows Job matching models Employment protection;
Other versions of this item:
- Pierre-Jean Messe, 2010. "Taxation of early retirement windows and delaying retirement: the French experience," Working Papers halshs-00809758, HAL.
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
- J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
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