We extend Hopenhayn and Nicolini's [1997] optimal unemployment contracts by including life-cycle features. We show that it is optimal to implement an age-dependant contract. Indeed, the elderly have only a few years left on the labor market prior to retirement. The short horizon of old workers...

This paper extends the job creation - job destruction approach to the labor market to take into account the life-cycle of workers. Forward looking decisions about hiring and firing depend on the time over which to recoup adjustment costs. The equilibrium is typically featured by increasing...

Inflation and unemployment are central issues in macroeconomics. While much progress has been made on these issues by incorporating frictions using search theory, existing models analyze either unemployment or inflation. We develop a framework to analyze unemployment and inflation together. This...