Work

Why was there mandatory retirement?

Year: 1989

Type: article

Abstract: Lazear argues that hours constraints and mandatory retirement form part of an efficient contract which inhibits worker shirking. He argues that initially workers earn less than their VMP and must work more than they want while later they earn more than their VMP and must work less. However, if bonding is costly, incentive compatibility requires that workers can never exceed the contracted hours. In addition, hours will be set so that VMP exceeds the disutility of employment. Consequently, being paid more than their VMP is only sufficient not necessary for workers to be constrained to work less than they wish.

Source: Journal of Public Economics

DOI: 10.1016/0047-2727(89)90058-3

Author: Kevin Lang

Institutions: Boston University, National Bureau of Economic Research

Language: English

Topic: Retirement, Disability, and Employment

Subfield: Demography

Field: Social Sciences

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: hybrid

Estimated APC paid: $4,510