Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/34899
Authors: 
Chéron, Arnaud
Hairault, Jean-Olivier
Langot, François
Year of Publication: 
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: 
Document Type: 
Working Paper

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