Taxation of early retirement windows and delaying retirement: the French experience

Pierre-Jean Messe (1, 2, 3)

1 LEMNA - Laboratoire d'économie et de management de Nantes Atlantique
2 GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux
3 TEPP - Travail, Emploi et Politiques Publiques

This paper investigates the e ect of the 2003 French pension reform on hiring, ring and employment rates among older workers. This reform increased the mandatory retirement age and simultaneously it set a tax levied on early retirement windows payed by rms to their older workers, to encourage them to leave their job early. We use a matching model with endogenous job destruction extended to account for a mandatory retirement age and we calibrate the model with data drawn from the French Labor Force Surveys for the years 2001 and 2002. We show that in the case of a high tax rate, delaying retirement raises job separation rates, which partially o sets its positive e ect on job nding rates. Consequently, the combination of an increase in the retirement age and a taxation on early retirement windows may have perverse e ects on the employment rate among older workers.

Mots clés: delaying retirement; erly retirement windows; matching models; employment protection

Domaines: Economies et finances

Pierre-Jean Messe. Taxation of early retirement windows and delaying retirement: the French experience. 2010. ⟨halshs-00809758⟩