Early retirement as a labor force policy: an international overview.

Abstract

In grappling with the problems posed by high and persistent unemployment which continue to plague the countries of Western Europe and North America an array of labor market policies have been implemented to lower or at least contain the ranks of the unemployed. Early retirement programs many that were initially formulated to achieve broad social goals rather than labor market equilibrium have taken several forms: 1) prerecession schemes originally introduced within the framework of social policies to benefit older workers; 2) other types of schemes such as disability programs into which economic and additional health criteria have been introduced; and 3) specific recession-oriented measures to promote premature retirement that were established in response to chronic high rates of unemployment of the 1970s and early 1980s. The article presents a brief discussion of early retirement programs in general followed by an inventory of specific measures implemented on a country-by-country basis. From a long-term perspective the advisability of encouraging premature retirement seems highly questionable. Given falling birth rates and subsequent future contractions in the working-age population labor force growth will come to a virtual standstill in developed countries by the year 2000. A more appropriate future policy would thus appear to call for gradually raising the mandatory age of retirement while eliminating the incentives to early retirement.