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Title:Life-cycle equilibrium unemployment PDF Logo
Authors:Chéron, Arnaud
Hairault, Jean-Olivier
Langot, François
Issue Date:2008
Series/Report no.:IZA Discussion Papers 3396
Abstract: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.
Subjects:Job search
matching
life cycle
JEL:J22
Persistent Identifier of the first edition:urn:nbn:de:101:1-2008031807
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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