This paper studies the effect that a labour market for older workers will have on the ratchet effect. Even though we assume that the information on worker type that a firm obtains will not be transmitted to the other firms, the presence of the ex post labour market eliminates the ratchet effect....

Labor management practices in Japan are quite different from those in the United States. Based on recent developments in contract theory, we develop a conceptual framework to understand why the differences have been maintained for a long period time. Our basic message is that the American and...