In Lazear's (1979) model of efficient long-term incentive contracts, employers impose involuntary retirement based on age. This model implies that age discrimination laws, which bar involuntary terminations based on age, discourage the use of such contracts and reduce efficiency. Alternatively,...

In Lazear's model of long-term incentive contracts, age discrimination laws barring age-based involuntary terminations preclude such contracts, reducing efficiency. Alternatively, such laws may serve as precommitment devices for these contracts, without preventing firms from offering strong...