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Use and misuse of unemployment benefits for early retirement

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  • Cremer, Helmuth
  • Lozachmeur, Jean-Marie
  • Pestieau, Pierre

Abstract

Unemployment insurance (UI) in some countries is one of the most widely used routes to early retirement. Accordingly, firms lay off elderly workers whose wages exceed their productivity. These workers then receive unemployment benefits until they enter formal retirement, even though they have effectively already exited the labor market. To persuade them into finding the deal acceptable, they quite often may also receive some additional compensation from their employers. In this paper we consider three routes of transition from work to formal retirement that rely on UI: (i) standard unemployment compensation, (ii) public early retirement program yielding benefits higher than the unemployment compensation and (iii) unemployment compensation along with an income supplement provided by the former employer. The study examines under which conditions these three alternative practices can occur.

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Bibliographic Info

Article provided by Elsevier in its journal European Journal of Political Economy.

Volume (Year): 25 (2009)
Issue (Month): 2 (June)
Pages: 174-185

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Handle: RePEc:eee:poleco:v:25:y:2009:i:2:p:174-185

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Web page: http://www.elsevier.com/locate/inca/505544

Related research

Keywords: Early retirement Unemployment;

References

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  1. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  2. Annemiek van Vuren & Daniel van Vuuren, 2005. "Financial incentives in disability insurance in the Netherlands," CPB Discussion Paper 45, CPB Netherlands Bureau for Economic Policy Analysis.
  3. CREMER, Helmuth & LOZACHMEUR, Jean-Marie & PESTIEAU, Pierre, . "Social security, retirement age and optimal income taxation," CORE Discussion Papers RP -1722, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. J. Ignacio Conde-Ruiz & Vincenzo Galasso, . "Early retirement," Working Papers 2003-03, FEDEA.
  5. Jonathan Gruber & David A. Wise, 1999. "Social Security and Retirement around the World," NBER Books, National Bureau of Economic Research, Inc, number grub99-1, July.
  6. Jonathan Gruber & David A. Wise, 1999. "Introduction to "Social Security and Retirement around the World"," NBER Chapters, in: Social Security and Retirement around the World, pages 1-35 National Bureau of Economic Research, Inc.
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Cited by:
  1. alain Jousten & Mathieu Lefebvre, 2013. "Retirement incentives in Belgium: estimations and simulations using SHARE data," CREPP Working Papers 1303, Centre de Recherche en Economie Publique et de la Population (CREPP) (Research Center on Public and Population Economics) HEC-Management School, University of Liège.
  2. Alain Jousten & Mathieu Lefebvre & Sergio Perelman, 2012. "Disability in Belgium: There Is More Than Meets the Eye," NBER Chapters, in: Social Security Programs and Retirement around the World: Historical Trends in Mortality and Health, Employment, and Disability Insurance Participatio, pages 251-276 National Bureau of Economic Research, Inc.
  3. Filges, Trine & Larsen, Mona & Pedersen, Peder J., 2012. "Retirement: Does Individual Unemployment Matter? Evidence from Danish Panel Data 1980–2009," IZA Discussion Papers 6538, Institute for the Study of Labor (IZA).
  4. Hugo Benítez-Silva & Richard Disney & Sergi Jiménez Martín, 2009. "Disability, Capacity for Work and the Business Cycle: An International Perspective," Working Papers 2009-28, FEDEA.

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