Reference : Declining bargaining power of workers and the rise of early retirement in Europe
E-prints/Working papers : First made available on ORBilu
Business & economic sciences : Macroeconomics & monetary economics
Declining bargaining power of workers and the rise of early retirement in Europe
Batyra, Anna [Galatasaray University]
de la Croix, David [Université Catholique de Louvain - UCL > IRES - Institut de Recherches Economiques et Sociales]
Pierrard, Olivier [BCL - Banque Centrale du Luxembourg]
Sneessens, Henri mailto [University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Center for Research in Economic Analysis (CREA)]
[en] Overlapping Generations ; Search Unemployment ; Labor Force Participation ; Aging ; Labor Market Policy and Institutions
[en] We offer an alternative explanation for the decline in labor force participation of senior workers. Typically, tax and transfer explanations have been proposed. On the contrary, a model with imperfectly competitive labor market allows to consider as well the effects of a drop in bargaining power, which would not be possible in a purely neoclassical framework. We find that a decline in the bargaining power of workers, which has taken place in the last four decades, has largely contributed to the rise in inactivity in Europe. However, we need a combination of these two explanations, along with population aging and a fall in the matching efficiency, in order to correctly reproduce the joint evolutions of other labor market variables such as the employment and unemployment rates.

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