expensive older workers into retirement. Based on the seniority wage model developed by Lazear (1979), we discuss steep … seniority wage profiles as incentives for firms to dismiss older workers before retirement. Conditional on individual retirement … incentives, e.g., social security wealth or health status, the steepness of the wage profile will have different incentives for …

We estimate wage and job tenure functions that include individual and firm effects capturing time-invariant unobserved … effects in both the wage and the job tenure equation. We look into the correlation of the unobserved heterogeneity components … with each other. We find that high-wage workers tend to be low-tenure workers, i.e. higher unobserved ability seems to be …