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Early Retirement Programs and Wage Restraint: Empirical Evidence from France

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  • David M. Gray

Abstract

Labor-force withdrawal programs such as government-subsidized early retirement programs are an important unemployment policy instrument in some European countries. Most economists, however, have expressed doubts concerning these programs' efficacy in combating unemployment, in part because they cause a reduction in effective labor supply, which in turn places undue upward pressure on the wage level. This paper analyzes the wage pressure effects of the early retirement program in France in 1984–86. In contrast to most existing studies of such programs, which have analyzed aggregate labor markets based on the country as the unit of observation, the empirical analysis in this paper employs a partial equilibrium framework and uses less aggregated, sectoral data. The findings suggest, consistent with results from most of the aggregate labor market studies, that the early retirement program had a slight positive impact on wage pressure.

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  • David M. Gray, 2002. "Early Retirement Programs and Wage Restraint: Empirical Evidence from France," ILR Review, Cornell University, ILR School, vol. 55(3), pages 512-532, April.
    • Handle: RePEc:sae:ilrrev:v:55:y:2002:i:3:p:512-532
    DOI: 10.1177/001979390205500307
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    1. Herbertsson, Tryggvi Thor & Orszag, Mike, 2003. "The Early Retirement Burden: Assessing the Costs of the Continued Prevalence of Early Retirement in OECD Countries," IZA Discussion Papers 816, Institute of Labor Economics (IZA).

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    More about this item

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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