Early Retirement of Older Male Workers Under the Dutch Social Security Disability Insurance Programme

Abstract

In the Netherlands, and elsewhere, labour force participation among older workers has been steadily declining during the 1970s and 1980s. Extrapolation of this trend combined with the demographic trend of the greying of the baby-boom generation would predict alarming labour shortages in the future. Fortunately, things are likely to turn out less dramatic than they seem at the moment. Preferences for (early) retirement are likely to be reduced by the market mechanism inducing wages to rise and improving the career prospects for older workers in general. On top of that, adjustments of private and public pension schemes (and also of related schemes such as public disability programmes) may be introduced to restrict pension eligibility and decrease post-retirement income. The market mechanism reinforced by policy measures may, therefore, reverse the downward trend in labour force participation of older workers.