Reversing Early Retirement in Advanced Welfare Economies

A Paradigm Shift to Overcome Push and Pull Factors

Abstract

Recent reform efforts of advanced welfare states have attempted to reverse trends in early retirement and increase the statutory retirement age. This paradigm shift often occurred against the protest of unions, firms and their employees. As a consequence of expanding welfare states and as response to economic challenges since the 1970s early exit from work has become a widespread practice. Early retirement has been part of Continental Europe’s welfare without work problem, while the Scandinavian welfare states, the Anglophone liberal economies and the Japanese welfare society were able to maintain higher levels of employment for older workers. Since the 1990s, an international consensus to reverse early exit from work emerged among international organisations and national policy experts. Based on a comparative historical analysis of selected OECD countries, this study analyses the cross-national variations in the institutionalisation of early exit regimes and its recent reversal using macro-indictors on early exit trends and stylised information on institutional arrangements. Comparing the interaction of social policy and economic institutions, it reviews the cross-national differences in welfare state “pull” and economic “push” factors that have contributed to early exit from work and discusses the likely impact of welfare retrenchment and assesses the importance of “retention” factors such as activation policies for decreasing early exit from work.