Does the Growth Process Discriminate Against Older Workers?

Langot, François; Moreno‐Galbis, Eva

doi:10.2139/ssrn.1309083

Cited by 4 publications

References 9 publications

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The impact of TFP growth on the unemployment rate: Does on-the-job training matter?

Galbis

2012

European Economic Review

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This paper seeks to gain insights into the relationship between growth and unemployment in a setting with heterogeneous skills, human capital accumulation, on-the-job training and capital-skill complementarity. We use an endogenous job destruction framework in the style of Mortensen and Pissarides (1998) with directed search. We show that, when growth accelerates, a larger share of unskilled workers seeks training, increasing firms' incentives to update job-specific technology (rather than destroying it). By magnifying the impact of growth on employment, the introduction of human capital issues allows the model to more closely match the estimated sensitivity of unemployment with respect to growth. When calibrated, the model manages to reproduce the aggregate capitalization effect estimated using OECD data. We find that growth reduces unemployment for individuals receiving training, while it increases the unemployment rate of unskilled workers without training (creative destruction effect).

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The impact of TFP growth on the unemployment rate: Does on-the-job training matter?

Galbis

2012

European Economic Review

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Creative destruction with on-the-job search

Michau

2013

Review of Economic Dynamics

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This paper is about the labour market consequences of creative destruction with on-the-job search. We consider a matching model in an economy with embodied technological progress and show that its dynamics are profoundly affected by allowing on-the-job search. We obtain that the elasticity of unemployment with respect to growth shrinks from 1.63 to 0.13. Moreover, the underlying transmission channels change as the flow of obsolete jobs practically disappears and is replaced by a flow of job-to-job transitions. These effects persist even if employed job seekers are significantly less efficient in the search process than the unemployed. Thus, we show that, rather than contributing to unemployment, creative destruction induces a direct reallocation of workers from low to high productivity jobs. These results could be strengthened by assuming that search efforts are unobservable by firms which induces more on-the-job search. However, the action of worker is no longer surplus maximizing and, hence, the worker's welfare is increasing in the cost of search which acts as a commitment device. Finally, we show that the model could be extended by allowing for variable search intensity.

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