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Structural changes in the labor market and the rise of early retirement in Europe

Author

Listed:
  • Anna Batyra

    (Bogazici University, Istanbul)

  • David de la Croix

    (IRES - CORE, Université catholique de Louvain)

  • Olivier Pierrard

    (Banque centrale du Luxembourg)

  • Henri Sneessens

    (CREA, Université du Luxembourg - IRES, Université catholique de Louvain)

Abstract

The rise of early retirement in Europe is typically attributed to the European system of taxes and transfers. Contrary to a purely neoclassical framework, a model with imperfectly competitive labor market also allows to consider the effect of the bargaining power of labor and matching efficiency on preretirement. We find that lower bargaining power of workers and less efficient labor markets characterized by the declining matching efficiency have been an important determinant of early retirement in France and Germany. These structural changes, combined with early-retirement transfers and population ageing, are also consistent with the joint evolution of employment and unemployment rates, the labor share and the seniority premium.

Suggested Citation

  • Anna Batyra & David de la Croix & Olivier Pierrard & Henri Sneessens, 2016. "Structural changes in the labor market and the rise of early retirement in Europe," DEM Discussion Paper Series 16-13, Department of Economics at the University of Luxembourg.
    • Handle: RePEc:luc:wpaper:16-13
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    More about this item

    Keywords

    Overlapping Generations; Search Unemployment; Labor Force Participation; Aging; Labor Market Policy and Institutions;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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