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Job Creation and Job Destruction over the Life Cycle: The Older Workers in the Spotlight

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Author Info

  • Hairault, Jean-Olivier

    ()
    (University of Paris 1 Panthéon-Sorbonne)

  • Chéron, Arnaud

    ()
    (University of Le Mans)

  • Langot, François

    ()
    (University of Le Mans)

Abstract

This paper extends the job creation - job destruction approach to the labor market to take into account the life-cycle of workers. Forward looking decisions about hiring and firing depend on the time over which to recoup adjustment costs. The equilibrium is typically featured by increasing (decreasing) firing (hiring) rates with age, and a hump-shaped age-dynamics of employment. The empirical plausibility of the model is assessed by incorporating existing age-specific labor market policies in France. Finally we show that the age-dynamics of employment is optimal when the Hosios condition holds and we design the optimal age-pattern for employment policies when this condition does not apply.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2597.

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Length: 60 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2597

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Related research

Keywords: job search; matching; life cycle;

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References

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  1. Leora Friedberg, 2001. "The Impact of Technological Change on Older Workers: Evidence from Data on Computer Use," NBER Working Papers 8297, National Bureau of Economic Research, Inc.
  2. Garibaldi, Pietro & Violante, Giovanni L, 2002. "Firing Tax and Severance Payment in Search Economies: A Comparison," CEPR Discussion Papers 3636, C.E.P.R. Discussion Papers.
  3. Seater, John J., 1977. "A unified model of consumption, labor supply, and job search," Journal of Economic Theory, Elsevier, vol. 14(2), pages 349-372, April.
  4. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-85, December.
  5. David Neumark, 2003. "Age Discrimination Legislation in the United States," Contemporary Economic Policy, Western Economic Association International, vol. 21(3), pages 297-317, 07.
  6. Behaghel, Luc & Crépon, Bruno & Sédillot, Béatrice, 2005. "The Perverse Effects of Partial Employment Protection Reform: Experience Rating and French Older Workers," IZA Discussion Papers 1679, Institute for the Study of Labor (IZA).
  7. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-46, July.
  8. Leon J.H. Bettendorf & D. Peter Broer, 2003. "Lifetime Labor Supply in a Search Model of Unemployment," Tinbergen Institute Discussion Papers 03-032/2, Tinbergen Institute.
  9. Moen, Espen R, 1997. "Competitive Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 105(2), pages 385-411, April.
  10. Bartel, Ann P & Sicherman, Nachum, 1993. "Technological Change and Retirement Decisions of Older Workers," Journal of Labor Economics, University of Chicago Press, vol. 11(1), pages 162-83, January.
  11. Judith Hellerstein & David Neumark, 2004. "Production Function and Wage Equation Estimation with Heterogenous Labor: Evidence from a New Matched Employer-Employee Dataset," Working Papers 04-05, Center for Economic Studies, U.S. Census Bureau.
  12. John M. Abowd & Francis Kramarz, 1997. "The Costs of Hiring and Separations," NBER Working Papers 6110, National Bureau of Economic Research, Inc.
  13. Sveinbjörn Blöndal & Stefano Scarpetta, 1999. "The Retirement Decision in OECD Countries," OECD Economics Department Working Papers 202, OECD Publishing.
  14. Roger, Muriel & Aubert, Patrick & Caroli, Eve, 2006. "New technologies, organisation and age: firm-level evidence," Economics Papers from University Paris Dauphine 123456789/10051, Paris Dauphine University.
  15. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
  16. Stephen Machin & Alan Manning, 1998. "The Causes and Consequences of Long-Term Unemployment in Europe," CEP Discussion Papers dp0400, Centre for Economic Performance, LSE.
  17. Mortensen, Dale T & Pissarides, Christopher, 1999. "New Developments in Models of Search in the Labour Market," CEPR Discussion Papers 2053, C.E.P.R. Discussion Papers.
  18. Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
  19. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-84, December.
  20. Robert E. Hall, 2005. "Employment Fluctuations with Equilibrium Wage Stickiness," American Economic Review, American Economic Association, vol. 95(1), pages 50-65, March.
  21. Michael Pries & Richard Rogerson, 2005. "Hiring Policies, Labor Market Institutions, and Labor Market Flows," Journal of Political Economy, University of Chicago Press, vol. 113(4), pages 811-839, August.
  22. Heckman, James J, 1974. "Life Cycle Consumption and Labor Supply: An Explanation of the Relationship Between Income and Consumption Over the Life Cycle," American Economic Review, American Economic Association, vol. 64(1), pages 188-94, March.
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Citations

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Cited by:
  1. Claudia Senik & Thierry Verdier, 2007. "Segregation, entrepreneurship and work values: the case of France," PSE Working Papers halshs-00587718, HAL.
  2. Chéron, Arnaud & Hairault, Jean-Olivier & Langot, François, 2011. "Life Cycle Equilibrium Unemployment," CEPREMAP Working Papers (Docweb) 1103, CEPREMAP.
  3. Pierre-Jean Messe, 2010. "Taxation of early retirement windows and delaying retirement: the French experience," Working Papers halshs-00809758, HAL.
  4. Messe, Pierre-Jean & Rouland, Bénédicte, 2012. "Stricter employment protection and firms’ incentives to sponsor training: The case of French older workers," CEPREMAP Working Papers (Docweb) 1206, CEPREMAP.
  5. Langot, François & Moreno-Galbis, Eva, 2008. "Does the Growth Process Discriminate against Older Workers?," IZA Discussion Papers 3841, Institute for the Study of Labor (IZA).
  6. repec:hal:wpaper:halshs-00587718 is not listed on IDEAS
  7. repec:tep:teppwp:wp1011 is not listed on IDEAS
  8. Hahn, Volker, 2009. "Search, unemployment, and age," Journal of Economic Dynamics and Control, Elsevier, vol. 33(6), pages 1361-1378, June.
  9. Michella Bia & Pierre-Jean Messe & Roberto Leombruni, 2010. "Young-in Old-out: a new evaluation," Working Papers halshs-00812056, HAL.
  10. repec:tep:teppwp:wp1014 is not listed on IDEAS
  11. Fujimoto, Junichi, 2013. "A note on the life-cycle search and matching model with segmented labor markets," Economics Letters, Elsevier, vol. 121(1), pages 48-52.
  12. Moreno-Galbis Eva & LANGOT Francois, 2008. "Does growth discriminates against older workers?," 2008 Meeting Papers 590, Society for Economic Dynamics.

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