Early Retirement Programs and Wage Restraint: Empirical Evidence from France

Industrial & Labor Relations Review, Vol. 55, No. 3, April 2002

Posted: 27 May 2002

See all articles by David M. Gray

David M. Gray

University of Ottawa - Department of Economics

Abstract

Labor-force withdrawal programs such as government-subsidized early retirement programs are an important unemployment policy instrument in some European countries. Most economists, however, have expressed doubts concerning these programs' efficacy in combating unemployment, in part because they cause a reduction in effective labor supply, which in turn places undue upward pressure on the wage level. This paper analyzes the wage pressure effects of the early retirement program in France in 1984-86. In contrast to most existing studies of such programs, which have analyzed aggregate labor markets based on the country as the unit of observation, the empirical analysis in this paper employs a partial equilibrium framework and uses less aggregated, sectoral data. The findings suggest, consistent with results from most of the aggregate labor market studies, that the early retirement program had a slight positive impact on wage pressure.

Keywords: early retirement programs, wage pressure, France, unemployment policy

JEL Classification: J23, J26, J31, J51

Suggested Citation

Gray, David M., Early Retirement Programs and Wage Restraint: Empirical Evidence from France. Industrial & Labor Relations Review, Vol. 55, No. 3, April 2002, Available at SSRN: https://ssrn.com/abstract=307539

David M. Gray (Contact Author)

University of Ottawa - Department of Economics ( email )

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Ottawa, Ontario K1N 6N5
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