Promotion and Optimal Retirement
AbstractIn this paper, a firm maximizes profits over choices of wage schedul es and hiring schedules in a model with (1) turnover costs, (2) a pro ductivity function that depends on position and experience, and (3) employee utility functions that depend on monetary compensation and position. It is shown that firms may have reason to encourage employe es to retire before their reservation wage is greater than their marg inal product. However, if an alternative definition of marginal produ ct is used, the usual relation holds. Copyright 1987 by University of Chicago Press.
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Bibliographic InfoArticle provided by University of Chicago Press in its journal Journal of Labor Economics.
Volume (Year): 5 (1987)
Issue (Month): 4 (October)
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Web page: http://www.journals.uchicago.edu/JOLE/
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- Steven Stern & Petra Todd, 2000. "A Test Of Lazear’S Mandatory Retirement Model," Virginia Economics Online Papers 391, University of Virginia, Department of Economics.
- Bellmann, Lutz & Janik, Florian, 2007. "Firms and Early Retirement: Offers That One Does Not Refuse," IZA Discussion Papers 2931, Institute for the Study of Labor (IZA).
- David Dorn & Alfonso Sousa-Poza, 2005. "Early Retirement: Free Choice or Forced Decision," CESifo Working Paper Series 1542, CESifo Group Munich.
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