The rise of early retirement in Europe is typically attributed to the European system of taxes and transfers.
A model with an imperfectly competitive labor market allows us to consider also the effects of bargaining
power and of matching efficiency on pre-retirement.  We find that lower bargaining power of workers and
declining matching efficiency have been important determinants of early retirement in France and Germany.
These structural changes, combined with early-retirement transfers and population aging, are also consistent
with the employment and unemployment rates, labor share and seniority premia.