Working Paper: NBER ID: w25733
Authors: Didier Blanchet; Antoine Bozio; Simon Rabat; Muriel Roger
Abstract: Over the last fifteen years, France has experienced a reversal of older workers’ labor force participation and employment rates. Changes in health, life expectancy or education levels over the period are trend variables and thus cannot explain this “U-shaped” time profile. Pension reforms and associated changes in monetary incentives to retire are a more plausible explanation. Their impact is measured by the implicit tax rate on working longer, which combines induced changes in the level of benefits and the fact of foregoing one year of these benefits. We also account for changes in the relative importance of alternative pathways to normal retirement. Pension reforms and access to these alternative pathways have moved in ways that can account for a significant part of the “U-shaped” pattern of older workers labor force participation.
Keywords: Pension Reforms; Labor Market Participation; Implicit Taxation; Older Workers
JEL Codes: H55
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Pension reforms (H55) | Implicit tax rate on labor for individuals over 60 (J26) |
| Implicit tax rate on labor for individuals over 60 (J26) | Employment rates for older workers (J26) |
| Pension reforms (H55) | Employment rates for older workers (J26) |
| Changes in pension legislation since the mid-1980s (H55) | Labor force participation rates for men aged 55-59 and women aged 60-64 (J49) |