Faced with the economic slowdown and the rise in the level of unemployment of recent decades, many European economies have favored a policy response that has encouraged the gradual withdrawal of elderly workers from the labor market (Clark and Anker 1990: 225: 257, Kohli et al. ed. 1991, Naschold and de Vroom 1994, Blondal and Pearson 1995). During the 1970s, elderly workers became the labor market group most vulnerable to the risk of unemployment and, during the 1980s, a rapidly growing new clientele of the welfare state. Although the trend toward declining labor force participation rates at the end of the working life is more pronounced in continental European economies, it remains a pervasive phenomenon characteristic of all mature welfare states.

In many respects, early retirement policies are a hybrid policy outcome. They are situated at the interface of several subsystems of the welfare state (disability, old-age, and unemployment insurance) and of private, firm-level practices and public policies. A profound political uncertainty about the distribution of the costs of these policies has been central to political debates concerning the evolution of this policy. Two such distributional conflicts have shaped the development of early retirement. The first concerns the division of the costs of early retirement among the beneficiaries of these policies (firms and elderly workers) and the broader community of taxpayers to social insurance. The second conflict concerns the distribution of costs among the different subsystems of the welfare state. Are early retirees unemployed elderly workers or have they earned, by virtue of their participation in the efforts of postwar economic development, the right to an early pension? Should their benefits be financed by employers or by the public authorities? In an effort to characterize the development of these policies, several social policy scholars have used the metaphor of a welfare state in which various risks are increasingly “blurred” (Gaullier 1992: 23-45, Guillemard 1993a: 266, Guillemard 1997: 15-30).

This chapter analyzes the development of early retirement policies in France and Germany during the 1970s and 1980s. These political episodes provide an ideal case allowing us to test the theoretical model of Chapter 2 in a policy context characterized by a very high density of existing policies and welfare state programs.