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Taxation of early retirement windows and delaying retirement: the French experience

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  • Pierre-Jean Messe

    (LEMNA - Laboratoire d'économie et de management de Nantes Atlantique - IEMN-IAE Nantes - Institut d'Économie et de Management de Nantes - Institut d'Administration des Entreprises - Nantes - UN - Université de Nantes, GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université, TEPP - Travail, Emploi et Politiques Publiques - UPEM - Université Paris-Est Marne-la-Vallée - CNRS - Centre National de la Recherche Scientifique)

Abstract

This paper investigates the e ect of the 2003 French pension reform on hiring, ring and employment rates among older workers. This reform increased the mandatory retirement age and simultaneously it set a tax levied on early retirement windows payed by rms 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 2001 and 2002. We show that in the case of a high tax rate, delaying retirement raises job separation rates, which partially o sets its positive e ect on job nding rates. Consequently, the combination of an increase in the retirement age and a taxation on early retirement windows may have perverse e ects on the employment rate among older workers.

Suggested Citation

  • Pierre-Jean Messe, 2010. "Taxation of early retirement windows and delaying retirement: the French experience," Working Papers halshs-00809758, HAL.
    • Handle: RePEc:hal:wpaper:halshs-00809758
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00809758
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    References listed on IDEAS

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    1. Jennifer Kunz & Laura Michele Ludwig, 2022. "Curbing Discriminating Human Resource Practices—A Microfounded Perspective," Schmalenbach Journal of Business Research, Springer, vol. 74(3), pages 307-344, September.

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    More about this item

    Keywords

    delaying retirement; erly retirement windows; matching models; employment protection;
    All these keywords.

    JEL classification:

    • 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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