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Does the growth process discriminate against older workers?

  • Langot, François
  • Moreno-Galbis, Eva

This paper seeks to gain insights on the relationship between growth and employment when considering heterogeneous agents in terms of their working horizon. Using an OECD database, our empirical estimations suggest that growth positively influences the employment rate of workers having a long working horizon (young workers) while negatively influences the employment rate of workers having a short working horizon (senior workers). We then provide theoretical foundations to this result by means of an endogenous job destruction framework à laMortensen and Pissarides (1998) where we introduce life cycle features. We show that, under the assumption of homogeneous productivity among workers, growth negatively affects the employment rate of workers having a short working horizon before retirement (senior workers) while it positively affects the employment rate of workers having a long working horizon (young workers). Numerical simulations confirm these results, however a non-standard calibration is required to reproduce the elasticity values obtained in our empirical estimations.

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Article provided by Elsevier in its journal Journal of Macroeconomics.

Volume (Year): 38 (2013)
Issue (Month): PB ()
Pages: 286-306

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Handle: RePEc:eee:jmacro:v:38:y:2013:i:pb:p:286-306
DOI: 10.1016/j.jmacro.2013.09.021
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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