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This chapter analyzes the economic ‘push’ factors that lead to early exit from work. Some firms co-sponsor early retirement via occupational pensions in order to facilitate restructuring. Deindustrialization, mass unemployment, and privatization have increased structural push, with early exit spreading widely across sectors. Two varieties of capitalism can be observed: early exit is used by firms to adapt to regulated labor markets in Continental coordinated market economies, it is more cyclical and infrequent in Anglophone flexible labor markets, while Japan and Sweden are exceptional cases that integrate older workers.

The chapter discusses how the state, employers, and organized labor promote and reform early retirement policies. What interests do workers, employers, and workplace representatives have in using early exit? Beyond the workplace, interest coalitions may arise among governments, employer associations, and trade unions to externalize restructuration costs, reduce labor supply, and buy social peace.

There are multiple pathways to early exit from work: early pensions (retirement age before 65), flexible and partial pensions, special preretirement schemes, long-term unemployment benefits, and disability pensions. Early exit from work often emerged as an unintended consequence of progressive social policies. But once institutionalized, these exit pathways were difficult to reform, particularly in Continental European welfare states. In contrast, fewer and less generous pathways exist in Scandinavia, Anglophone economies, and Japan.

Governments have realized the negative impact of early retirement on social expenditures and labor costs, responding with a paradigm shift away from passive labor market policies. Governments seek to reverse early exit by raising the retirement age in pension systems, reforming disability insurance, closing special early retirement programs, activating older workers, and fostering gradual transitions to retirement. These reforms met many obstacles given the entrenched multiple pathways and status quo defense of the social partners, particularly as benefits came to be viewed as acquired rights.

The chapter analyzes the main trends and cross-national variations in early exit from work for eight European countries, Japan, and the USA. Participation levels and employment rates of older workers between age 55 and 64 have declined. Cohort-adjusted early exit rates for both men and women show not only a rise in early retirement over the 1970s and early 1980s, but also substantial cross-national differences. Early exit from work is widespread in Continental Europe, less so in Scandinavia, Anglophone market economies, and in Japan.

This concluding chapter summarizes the main findings of the book, evaluating the protection-oriented ‘pull’ and production-oriented ‘push’ approaches to explain the long-term development and cross-national variations in early exit from work. It discusses the difficulties of ‘path dependence’ as well as the opportunities of institutional change to reverse early retirement policies. It recommends a paradigm shift away from early retirement in combination with integration policies that facilitate older workers to remain active.

After the first oil‐price crisis, many (but not all) OECD countries used early retirement as an adaptation to industrial restructuration, mass unemployment, the social needs of older workers, and the employment needs of young and female job seekers. As the costs of an increasingly inactive population rose, however, while expected employment effects failed to materialize, reformers sought to reverse the course of ‘welfare without work’. Besides blocking the pathways of early retirement, disability, and long‐term unemployment, welfare states are now stressing new forms of part‐time pension, extension, and equalization of normal pension age, and they are trying to shift responsibilities and costs to individuals and firms.

Early retirement has become a major issue of current welfare state reforms in aging societies. This introductory chapter discusses the different protection-oriented ‘pull’ and production-oriented ‘push’ factors that caused more early exit from work prior to age 65. It argues for systematic comparison of welfare regimes, production systems, and labor relations, as well as the study of the key role of social partners in institutional change.

The chapter examines the dynamics of policy responses and their ultimate effectiveness. It identifies typical sequences of policy failures, caused by the misfit between new problems and existing policy legacies, which may generate processes of policy learning that ultimately produce effective solutions; but it also points to instances in which policy learning is blocked by conflicts of interest or by divergent cognitive orientations in multi‐actor institutional settings. Of equal importance are sequences of lateral spillovers, where the solutions to problems in one policy area generate new problems that subsequently must be dealt with in adjacent policy areas. In the 1970s and 1980s, these spillovers were most important in countries where the rise of open unemployment was mitigated by resort to early retirement and disability pensions. In analysing these sequences of policy failure, learning, and problem displacement, the chapter also compares and assesses the greater or lesser effectiveness of the policy responses actually adopted and identifies successful countries that were able to adjust to the challenges of the open economy without abandoning their welfare‐state goals.

Today's retirees face the daunting task of determining appropriate investment and spending strategies for their accumulated savings. Financial economists have addressed their problem using an expected utility framework. In contrast, many financial advisors rely instead on rules of thumb. This chapter shows that some of the popular rules are inconsistent with expected utility maximization, since they subject retirees to avoidable, non-market risk. It also highlights the importance of earmarking ‘the existence of a one-to-one correspondence between investments and future spending’ and shows that a natural way to implement earmarking is to create a lockbox strategy.

The Bismarckian welfare state in France is financed by social security contributions to an even greater degree than is true in Germany. During the oil‐price crises of the 1970s and early 1980s, job losses could be contained through an expansion of nationalized industries and subsidies to private firms. This changed with the end of dirigisme in industry after 1983. Thereafter, early retirement was expanded to absorb the massive job losses caused by industrial restructuring. Since rising non‐wage labour costs impeded job creation in the private services, the government has shifted part of the burden to a special income tax, whereas attempts by successive governments to reduce the generosity of welfare benefits were typically blocked by large‐scale public protests.

When and why have employers supported the development of institutions of social insurance that provide benefits to workers for various employment‐related risks in the areas of unemployment insurance, accident insurance, and early retirement? This paper challenges the dominant explanations of welfare state development premised on the assumption of business opposition to social insurance. It examines the conditions under which firms support the introduction of a new social policy and specifies the most important variables explaining the variation in the social policy preferences of employers. The model is tested in three episodes of social policy development in Germany, relying on a collection of archival sources and policy documents submitted by business associations to bureaucratic and parliamentary commissions.

The relationship between union actions and welfare outcomes is developed, taking the provision of old‐age insurance as a natural example. This chapter develops the economic theory of how unions go about setting policies on pensions; it presents empirical evidence of their impact on occupational pensions and policies on state pensions and early retirement options; and it examines how union activities depend on labour relations institutions.

The Belgian case is hard to fit in the triple integration framework. The country never knew a dualist two-tiered unemployment benefit system, in need of benefit homogenization. The transition to a service sector economy started early, but did not result in a proliferation of atypical employment. There never was a significant transfer of working-age jobless persons to other working-age benefits, as most were entitled to some kind of unemployment insurance benefit. Even though activation measures propagated, the political dynamics of a central state under devolution prevented an administrative merger, and to some extent even exacerbated institutional fragmentation. Rather than a radical reconfiguration of risks, one can observe a form of institutional layering, whereby the unemployment insurance system is attributed additional functions, such as early retirement to facilitate labour shedding, or career breaks, time credit, and service vouchers to offset the cost disease problems of personal service jobs.

This chapter examines early exit and its consequences for marginalisation in the UK. In contrast to the case of the Nordic countries discussed elsewhere in this volume, early exit from the labour market has been a major cause of social exclusion and marginalisation, though not for all. In fact, it has often been aspired to and welcomed, though by a minority who are primarily from higher socioeconomic groups. British older workers are vulnerable to redundancy. This redundancy is often involuntary, and even if a person is re-employed, such employment has often been of low status and remuneration. Older workers are also over represented among the long-term unemployed and are more likely to have been claiming disability benefits for longer.

This paper explores the interrelationships between early retirement, mental health—especially cognition—and the size and composition of social networks among older people. While early retirement enables more leisure and relieves stressful job conditions, it also accelerates cognitive decline. We argue in this paper that part of this accelerated cognitive ageing occurs because social networks shrink especially after early retirement. Social contacts are a side effect of employment that keeps workers mentally agile. Social contacts, especially with friends, however, decline gradually after retirement, with an acceleration effect when retirement was early. The paper therefore puts some shade on the popular notion that early retirement is bliss.

Germans retire early, with average retirement age about fifty-nine-and-a-half years, half a year younger than the earliest eligibility age for old-age pensions and more than five years younger than the “normal” retirement age in Germany. Early retirement is a well-appreciated social achievement among Germans, but it is costly. Since life expectancy at age sixty is about seventeen years, a year of early retirement corresponds to more than 5 percent of pension expenditures. This chapter, which presents a study that is part of a multistage research project on the causes for, and the effects of, early retirement, provides econometric evidence for the strength of the incentive effects to retire early, based on micro-data. It is organized as follows. Sections 5.2 and 5.3 describe the institutional background for private-sector and civil servants' pensions. Section 5.4 presents data and variable specifications; Section 5.5 provides estimation results; and Section 5.6 explores what these estimates mean, simulates a set of pension reform steps, and concludes.

About 20% of German workers retire on disability pensions. Disability pensions provide fairly generous benefits for those who are not already age-eligible for an old-age pension and who are deemed unable to work for health reasons. In this paper, we use two sets of individual survey data to study the role of health and financial incentives in early retirement decisions in Germany, in particular disability benefit uptake. We show that financial incentives to retire do affect sick individuals at least as much as healthy individuals. Based on 25 years of individual survey data and empirical models of retirement behavior, we then simulate changes in the generosity of disability pensions to understand how these changes would affect retirement behavior. Our results show that making the disability benefit award process more stringent without closing other early retirement routes would not greatly increase labor force participation in old age.

This chapter analyzes the retirement behavior of Italian employees by considering different pathways to retirement such as old age, early retirement and disability insurance. In particular, we focus on the role played by health conditions and socio-economic factors beyond and above the financial incentives associated to each pathway. These incentives are measured by the option value of working an extra year vis-à-vis leaving the labor force through one of the alternative routes. The Italian experience has been characterized for many years by a relevant early retirement option, but a renewed interest by workers for disability pensions could stem from the recent pension reforms, which introduced tighter eligibility criteria for early exits. The financial incentives of the different pathways are used in a dynamic way, controlling for health conditions measured by an overall health index. The econometric estimates are based on the SHARE data: we find that the recent reforms have induced some delay in the retirement decision and that health has important effects on the decision of working in old age.