Early Retirement: Free Choice or Forced Decision

David Dorn () and Alfonso Sousa-Poza ()

No CESifo Working Paper No. 1542, CESifo Working Paper Series from CESifo Group Munich

Abstract: Early retirement is usually explained as a supply-side phenomenon. However, early retirement can also be a demand-side phenomenon arising from a firm's profit maximization behavior. This paper analyzes voluntary and involuntary early retirement based on international microdata covering 19 industrialized countries. The results indicate that generous early retirement provisions of the social security system do not only make voluntary early retirement more attractive for individuals, but also induce firms to encourage more employees to retire early. In particular, firms seem to use early retirement to reduce staff during economic recessions and as a means to circumvent employment protection legislation.

Keywords: early retirement; involuntary early retirement; social security; pensions (search for similar items in EconPapers)
JEL-codes: J14 J21 J22 J26 (search for similar items in EconPapers)
Date: 2005
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