Aging and Job Security

Yu-Fu Chen and Gylfi Zoega

No 206, Dundee Discussion Papers in Economics from Economic Studies, University of Dundee

Abstract: We model a firm’s choice as to the age composition of dismissed workers for different assumptions about the level of firing costs. We find that when the cost of firing is independent of age, a higher level of firing costs will induce firms to fire their younger workers while lower costs induce them to fire the older ones. A corresponding effect is not found in the age dimension of the hiring decision. It follows that job protection favours more senior workers even when the cost of firing is independent of age and seniority.

Keywords: Age-structure; tenure; firing decisions; real options (search for similar items in EconPapers)
JEL-codes: E32 J23 J24 J54 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2007-12
New Economics Papers: this item is included in nep-age, nep-lab and nep-mac
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