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Does the growth process discriminate against older workers?

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  • Langot, François
  • Moreno-Galbis, Eva

Abstract

This paper seeks to gain insights on the relationship between growth and employment when considering heterogeneous agents in terms of their working horizon. Using an OECD database, our empirical estimations suggest that growth positively influences the employment rate of workers having a long working horizon (young workers) while negatively influences the employment rate of workers having a short working horizon (senior workers). We then provide theoretical foundations to this result by means of an endogenous job destruction framework à laMortensen and Pissarides (1998) where we introduce life cycle features. We show that, under the assumption of homogeneous productivity among workers, growth negatively affects the employment rate of workers having a short working horizon before retirement (senior workers) while it positively affects the employment rate of workers having a long working horizon (young workers). Numerical simulations confirm these results, however a non-standard calibration is required to reproduce the elasticity values obtained in our empirical estimations.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 38 (2013)
Issue (Month): PB ()
Pages: 286-306

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Handle: RePEc:eee:jmacro:v:38:y:2013:i:pb:p:286-306

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Web page: http://www.elsevier.com/locate/inca/622617

Related research

Keywords: TFP growth; Working horizon; Old workers’ employment rate; Capitalization; Creative destruction effect;

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References

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Citations

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Cited by:
  1. Fouad Khaskhoussi, 2009. "Job-Search Effort, Retirement Decision and Pension Reform: A Wage Bargaining Investigation," Economics Bulletin, AccessEcon, vol. 29(2), pages 1255-1263.
  2. Jean-Baptiste Michau, 2007. "Creative Destruction with On-the-Job Search," CEP Discussion Papers dp0835, Centre for Economic Performance, LSE.
  3. Cheron, Arnaud & Khaskhoussi, Fouad & Khaskhoussi, Tarek & Langot, François, 2004. "Voluntary and involuntary retirement decision : does real wage rigidity affects the effectiveness of pension reforms ?," MPRA Paper 9119, University Library of Munich, Germany.
  4. Moreno-Galbis, Eva, 2010. "On the impact of the TFP growth on the employment rate: does training on-the-job matter?," CEPREMAP Working Papers (Docweb) 1022, CEPREMAP.
  5. Moreno-Galbis, Eva, 2012. "The impact of TFP growth on the unemployment rate: does on-the-job training matter?," CEPREMAP Working Papers (Docweb) 1207, CEPREMAP.
  6. Karsten Wasiluk, 2014. "Technology Adoption and Demographic Change," Working Paper Series of the Department of Economics, University of Konstanz 2014-05, Department of Economics, University of Konstanz.

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