Didier Blanchet

Retirement, Early Retirement and Disability: Explaining Labor Force Participation after 55 in France

We analyze the influence of health and financial incentives on the retirement behavior of older workers in France, building upon Stock and Wise (1990) option value approach. The model accounts for three main retirement routes: the normal retirement, disability insurance (DI) and unemployment/preretirement pathways, and is estimated with a combination of microeconomic datasets that include the French data of the European SHARE survey. The estimates confirm that a decrease in the generosity of the pension and DI schemes induces people to stay longer in the labor market, and that people with better health tend to retire later. We present extreme situations simulating what individuals retirement behavior would have been if only one retirement route had existed and in the absence of constraints on work capabilities. We show that average years of work between 55 and 64 are nearly 14% greater when regular retirement incentives are applied to the whole population than when it is DI rules that are systematically applied.

Social Contract and Age at Retirement: Some Elements of a Franco-American Comparison

Age at retirement is one of the key parameters of the intergenerational social contract that has been progressively set in place by developed countries, and its adaptation to the new demographic conditions of this century is at the center of the pension debate. This debate goes further than the adaptation of pension rules stricto sensu. The main impact of these pension rules is on labor supply (Blondal and Scarpetta, 1999; Gruber and Wise, 2004; Duval, 2003). But the demand side of the labor market is now recognized as being equally important for explaining ages at effective exits from the labor force, and a specific role is also played by institutions that try to protect older workers from the consequences of low labor demand, such as pre-retirement schemes or specific adaptations of unemployment insurance targeted toward this category ofworkers (OECD, 2005). France provides an interesting case study for analyzing how these various components interact. France is characterized by one of the world’s lowest employment rates in the 55–64 age group, due to the superposition of relatively generous pension rules, a strong propensity of employers to get rid of more senior workers and the development of numerous opportunities to leave the labor force before normal retirement age (Lerais and Marioni, 2004; Marioni, 2005). Some significant steps have been made toward changing this state of affairs, through the 1993 and 2003 pension reforms, but the situation remains strongly contrasted with the situation of some other countries, especially the US, where labor force participation remains high for this age group. The purpose of this chapter is precisely to develop the most salient aspects of the functioning of the labor market for French senior workers, using