Corresponding author: Jean-Olivier Hairault, University of Paris 1, 106-112 Boulevard de l'Hôpital, 75647 Paris Cedex 13, France. Email: email@example.com.
Age-Dependent Employment Protection*
Article first published online: 27 JUN 2011
© 2011 The Author(s). The Economic Journal © 2011 Royal Economic Society
The Economic Journal
Volume 121, Issue 557, pages 1477–1504, December 2011
How to Cite
Chéron, A., Hairault, J.-O. and Langot, F. (2011), Age-Dependent Employment Protection. The Economic Journal, 121: 1477–1504. doi: 10.1111/j.1468-0297.2011.02453.x
We are grateful to two anonymous referees and the Editor particularly for their helpful remarks and suggestions. We are also indebted to P. Beaudry, G. Violante and A. Zylberberg and all participants at the following seminars and conferences for helpful comments: Crest (2007), Lausanne (2009), Luxembourg (2009), UBC-Vancouver (2009) and SED (2009). This article is a revised version of the IZA Working Paper 3851. Financial support through a grant from Cepremap (Paris) is gratefully acknowledged. Any errors and omissions are ours.
- Issue published online: 1 DEC 2011
- Article first published online: 27 JUN 2011
- Submitted: 17 July 2009 Accepted: 27 January 2011
This study examines age-dependent employment protection by extending the theory of equilibrium unemployment to account for a finite working life-time. The potential employment gains related to employment protection are high for older workers. But higher firing taxes for older workers increase job destruction rates for younger generations. Furthermore, when firms cannot ex ante age-direct their search, the impact of each generation of unemployed workers on the average return on vacancies leads to equilibrium inefficiency, such that the optimal age-profile of firing taxes is hump-shaped. If human capital of older workers is more specific than general these results are enhanced.