Aging and Job Security
AbstractWe model a firm’s choice as to the age composition of dismissed workers for different assumptions about the level of firing costs. We find that when the cost of firing is independent of age, a higher level of firing costs will induce firms to fire their younger workers while lower costs induce them to fire the older ones. A corresponding effect is not found in the age dimension of the hiring decision. It follows that job protection favours more senior workers even when the cost of firing is independent of age and seniority.
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Bibliographic InfoPaper provided by Economic Studies, University of Dundee in its series Dundee Discussion Papers in Economics with number 206.
Length: 25 pages
Date of creation: Dec 2007
Date of revision:
Age-structure; tenure; firing decisions; real options;
Find related papers by JEL classification:
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
This paper has been announced in the following NEP Reports:
- NEP-AGE-2008-09-20 (Economics of Ageing)
- NEP-ALL-2008-09-20 (All new papers)
- NEP-LAB-2008-09-20 (Labour Economics)
- NEP-MAC-2008-09-20 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Yu-Fu Chen & Gylfi Zoega, . "On The Effectiveness Of Firing Costs," Dundee Discussion Papers in Economics 087, Economic Studies, University of Dundee.
- Chen, Yu-Fu & Snower, Dennis J. & Gylfi, Zoega, 1999. "Firing Costs: Eurosclerosis or Eurosuccesses?," HWWA Discussion Papers 78, Hamburg Institute of International Economics (HWWA).
- Robert C. Merton, 1973. "Theory of Rational Option Pricing," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 141-183, Spring.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991.
"Unemployment: Macroeconomic Performance and the Labour Market,"
Oxford University Press, number 9780198284345, September.
- Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, September.
- Yu-Fu Chen & Dennis Snower & Gylfi Zoega, 1999.
"Firing Costs: Eurosclerosis Or Eurosuccesses,"
Dundee Discussion Papers in Economics
094, Economic Studies, University of Dundee.
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