Age-dependent employment protection

Arbeitspapier

This paper examines the age-related design of firing taxes by extending the theory of job creation and job destruction to account for a finite working life-time. We first argue that the potential employment gains related to employment protection are high for older workers, but higher firing taxes for these workers increase job destruction rates for the younger generations. On the other hand, age-decreasing firing taxes can lead to lower job destruction rates at all ages. Furthermore, from a normative standpoint, because firings of older (younger) workers exert a negative (positive) externality on the matching process, we find that the first best age-dynamic of firing taxes and hiring subsidies is typically hump-shaped. Taking into account distortions related to unemployment benefits and bargaining power shows the robustness of this result, in contradiction with the existing policies in most OECD countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 3851

Classification and Topics

• Classification: Wirtschaft ; Time Allocation and Labor Supply
• Subject: Search ; matching ; endogenous destruction ; older workers ; Kündigungsschutz ; Altersgruppe ; Ältere Arbeitskräfte ; Arbeitsuche ; Arbeitsnachfrage ; Matching ; Nash-Gleichgewicht ; Arbeitsmarkttheorie ; Lohnsubvention ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Chéron, Arnaud ; Hairault, Jean-Olivier ; Langot, François
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2008

Further information

• Handle: http://hdl.handle.net/10419/35801
• URN: urn:nbn:de:101:1-20081202100
• Last update: 10.03.2025, 11:44 AM CET