Turbulence and the Employment Experience of Older Workers

Etienne Lalé ()

No 10061, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper provides a unified account of the trends in unemployment and labor force participation pertaining to the employment experience of older male workers during the past half-century. We build an equilibrium life-cycle model with labor-market frictions and an operative labor supply margin, wherein economic turbulence à la Ljungqvist and Sargent (1998) interact with institutions in ways that deteriorate employment. The model explains simultaneously: (i) the fall in labor force participation in the United States, (ii) the similar but more pronounced decline in Europe alongside rising unemployment rates and (iii) differences across European countries in the role played respectively by unemployment and labor force participation. The model also shows that policies that fostered early retirement may have exacerbated the deterioration of European labor markets: raising early retirement incentives to reduce unemployment among older workers tends to increase unemployment at younger ages, especially in turbulent economic times and under stringent employment protection legislation.

Keywords: European unemployment; turbulence; job loss; job search; labor force participation (search for similar items in EconPapers)
JEL-codes: E24 J21 J64 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2016-07
New Economics Papers: this item is included in nep-age, nep-cse, nep-dge, nep-eur, nep-lab, nep-ltv and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Quantitative Economics, 2018, 9 (2), 735-784.

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Related works:
Journal Article: Turbulence and the employment experience of older workers (2018)
Working Paper: Turbulence and the Employment Experience of Older Workers (2016)
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