Effects of Early Retirement Programs on Youth Unemployment: A Ranked Matching Model with Age Heterogeneity

Details

Supervisors

Mathias Hungerbühler

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale, à finalité approfondie

Abstract

This paper introduces age-heterogeneity and ranking in a static matching model as in Hungerbuhler et al. (2012) and Landais et al. (2018). It does so by differentiating into three different age groups: young, middle and old. And ranking according to their productivity assuming middle-aged workers as the most productive group and older workers as the least productive. The proposed framework implies that firms prefer the most productive group and the matching rates depend on it and in the proportion of each group in the population. The work developed here aims to answer, from a theoretical perspective, the effects of early retirement programs on the young unemployment. We show the existence of a positive relation between the number of older workers in the labor force and the probability of finding a job for younger workers. Additionally, we find a negative relationship between young workers’ job find rate and the reservation wage of older workers.