Sunday, November 30, 2008

Research: Relationship of Age and Unemployment

The Institute for the Study of Labor has published a paper seeking "to gain insights on the relationship between growth and unemployment, when considering heterogeneous agents in terms of age." According to the authors (Fran├žois Langot and Eva Moreno-Galbis) of "Does the Growth Process Discriminate against Older Workers?":
under the assumption of homogeneous productivity among workers, firms tend to fire older workers more often than young ones, when deciding whether to update or not a technology: there is an equilibrium where the creative destruction effect dominates over the capitalization effect for old workers, whereas the capitalization effect dominates for young workers. This discrimination against older workers can be moderated when we introduce heterogeneity (in terms of productivity) among workers.
Source: Institute for the Study of Labor Discussion Paper 3841 Abstract (November 2008)

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