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Dismissals scheduling and the employment of older workers

Author

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  • Olivier Baguelin

    (UEVE-EPEE TEPP (FR-CNRS 3435))

Abstract

A model is built to study the joint effect on management of the older workforce of three crucial institutions: employment protection, the pension system, and the unemployment insurance (UI). More precisely, the interest is in the impact of corresponding settings (dismissal costs, replacement rates, UI benefit duration, statutory retirement age) on the age, at the date of job termination, of workers who experience a spell of unemployment before retiring. The opportunity cost to the worker of early exit from employment is shown to be increasing with the time distance until retirement. However, under specific assumptions particularly relevant within the continental Europe context, it is shown that corresponding marginal opportunity cost is very low provided time until retirement remains below the potential UI benefit duration (Lambda), much higher above. This makes dismissals at a time distance until retirement close to Lambda much more likely than at a shorter one. Comparative statics suggests that age (at the date of dismissal) is increasing with wage and decreasing with Lambda.

Suggested Citation

  • Olivier Baguelin, 2016. "Dismissals scheduling and the employment of older workers," Economics Bulletin, AccessEcon, vol. 36(4), pages 2443-2453.
  • Handle: RePEc:ebl:ecbull:eb-16-00266
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    File URL: http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I4-P236.pdf
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    References listed on IDEAS

    as
    1. Baguelin, Olivier & Remillon, Delphine, 2014. "Unemployment insurance and management of the older workforce in a dual labor market: Evidence from France," Labour Economics, Elsevier, vol. 30(C), pages 245-264.
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    More about this item

    Keywords

    Older workers; Unemployment insurance; benefit duration; retirement;
    All these keywords.

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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