Retirement age and senior workers’ employment: modelling the ‘distance-to-retirement’ effect

With the retirement reform of 2010, a new element has been taking into account in simulation model on retirement: the feedback effects on the labour market, or so-called ‘distance to-retirement’ effect. The 2010 reform has increased the minimum legal age of retirement progressively from 60 to 62 years old, then, what people will do between these two ages (and before 60 if they change their behaviour)? Will they stay in employment? Will they be unemployed? This study analyses how to model the distance to retirement effect and the consequences of different assumptions on two projected indicators: the employment rate and the activity rate. If the assumptions made seem to entail similar activity rate, the employment rate can have a difference of 10 percentage points according to the assumption. The conclusion in terms of political economy can be radically different from ‘a better senior employment rate’ to ‘a larger unemployment rate’.