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Aging and Job Security

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  • Yu-Fu Chen
  • Gylfi Zoega

Abstract

We 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.

Suggested Citation

  • Yu-Fu Chen & Gylfi Zoega, 2007. "Aging and Job Security," Dundee Discussion Papers in Economics 206, Economic Studies, University of Dundee.
    • Handle: RePEc:dun:dpaper:206
    as

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    File URL: http://www.dundee.ac.uk/media/dundeewebsite/economicstudies/documents/discussion/DDPE_206.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Age-structure; tenure; firing decisions; real options;
    All these keywords.

    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

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