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

  • Hairault, Jean-Olivier

    ()

    (University of Paris 1 Panthéon-Sorbonne)

  • Chéron, Arnaud

    ()

    (University of Le Mans)

  • Langot, François

    ()

    (University of Le Mans)

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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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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  16. 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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