Life-cycle equilibrium unemployment

Arbeitspapier

This paper develops a life-cycle approach to equilibrium unemployment. Workers only differ respectively to their distance from deterministic retirement. A non age-directed search equilibrium is then typically featured by increasing (decreasing) firing (hiring) rates with age and a hump-shaped age profile for employment. Because of intergenerational inefficiencies, the Hosios condition no longer achieves efficiency. We then explore the optimal age-pattern of some policy tools to restore this efficiency. The optimal profile for employment subsidies should increase with age, whereas firing taxes and hirings subsidies would have to be hump-shaped. Lastly, we examine the robustness of our results. We show that age-directed recruitment policies cannot exist in equilibrium even if it would have been ex-ante possible, and that introducing endogenous search effort of unemployed workers reinforces our main results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 3396

Classification and Topics

• Classification: Wirtschaft ; Time Allocation and Labor Supply
• Subject: Job search ; matching ; life cycle ; Theorie der Arbeitslosigkeit ; Lebenszyklus ; Arbeitsuche ; Arbeitsnachfrage ; Matching ; Arbeitsmarktpolitik ; Altersgruppe ; Theorie ; OECD-Staaten

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/10419/34899
• URN: urn:nbn:de:101:1-2008031807
• Last update: 10.03.2025, 11:46 AM CET