From internal to transitional labour markets? Firms restructuring and early retirement in France

Retirement from the labour market is a critical transition on which the political debate has focused in many European countries during the last few years, raising the issue of the sustainability of pension systems. One of the most striking features of the French labour market is the very low participation rate of older workers. This coincides with the intensive use of early retirement public funded schemes (ERS) - which are usually considered as "bad transitions". But the necessary reform does not rely only on the suppression of ERS. One must analyse why firms so intensively used early exits in the past years, i.e. what economic - and also social - factors contribute to explain the use of ERS. The paper intends to provide both theoretical insights and empirical evidence on this issue - referring to the French case. It relies on both quantitative and qualitative (i.e. case studies) empirical work. It claims that changes in technology, in organisational practices and more globally in internal labour markets are key factors to explain the low employment rates of older workers. These changes were facilitated by ERSs, but, in turn, they also increased the demand for these schemes. This path dependency phenomenon may reveal hard to counter.