Adjustment of Deferred Compensation Schemes, Fairness Concerns, and Hiring of Older Workers

Christian Pfeifer ()

No 151, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: Hutchens (1986, Journal of Labor Economics 4(4), pp. 439-457) argues that deferred compensation schemes impose fixed-costs to firms and, therefore, they employ older workers but prefer to hire younger workers. This paper shows that deferred compensation can be a recruitment barrier even without these fixed-costs, because adjustments of wage-tenure profiles for older new entrants can lead to adverse incentive effects from a fairness perspective. A personnel data set and a linked employeremployee data set reveal that wage-tenure profiles of white-collar workers are indeed adjusted according to entry age but that firms still hire few older workers.

Keywords: deferred compensation; entry age; fairness; internal labor markets; wages (search for similar items in EconPapers)
JEL-codes: J14 J31 J33 M51 M52 (search for similar items in EconPapers)
Pages: 56 pages
Date: 2009-11
New Economics Papers: this item is included in nep-age, nep-bec and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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