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Can I Stay or Should I Go? Mandatory Retirement and Labor Force Participation of Older Workers

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  • Simon Rabaté

    (PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

Retirement is commonly described as a pure labor supply decision, despite the potential importance of the demand side channel. This is partly due to the fact that both dimensions are often di?cult to disentangle. In this paper, I manage to overcome this di?culty by using a unique natural experiment, the progressive ban of mandatory retirement in France in the 2000s. Drawing on an extensive administrative dataset, I use inter-industry reform-induced variations in mandatory retirement legislation, thereby insulating this factor from other determinants of retirement, such as ?nancial incentives. I ?nd that demand-side determinants through mandatory retirement do a?ect retirement patterns: exit rates from employment are estimated to be 6% higher when mandatory retirement is possible. Secondly, as the mandatory retirement age coincides with the full rate age, I exhibit a previously uncovered determinant of the large bunching in retirement distribution at this age. Mandatory retirement is estimated to explain 10% of the observed spike at full rate.

Suggested Citation

  • Simon Rabaté, 2017. "Can I Stay or Should I Go? Mandatory Retirement and Labor Force Participation of Older Workers," Working Papers halshs-01521150, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01521150
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01521150
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    References listed on IDEAS

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    Keywords

    Retirement; Employment; Labor demand;
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