The Economics of Early Retirement
Posted: 27 Jun 2001
The trend in most of the industrialized counties is in the direction of decreasing labor force participation of older workers. The steady withdrawal of workers from the workforce at a younger age suggests that retirement income is gradually increasing and/or that older workers are increasingly being forced out of the labor market. Regardless of whether early retirement can be traced to the labor supply or the labor demand side of the labor market, it constitutes a withdrawal of resources from production, a lowered tax base, and an increased burden on pension and fiscal systems. This paper identifies and discusses alternative theories on why people retire early.
Keywords: Early retirement, labor supply/demand, foregone output
JEL Classification: H55, J14, J21, J26
Suggested Citation: Suggested Citation