There are jobs for which firms employ older workers but tend not to hire new older workers. This may be attributable in part to implicit contracts that discourage worker shirking and malfeasance by shifting compensation to the end of the contract. Such "delayed payment" contracts can introduce a form of fixed costs into the employment relationship. Much as with hiring and training costs, these fixed costs lead firms to hire primarily young (long-term) workers. While firms employ older workers-workers who are serving out the last years of their contract-they tend not to hire them. This paper presents empirical evidence that is consistent with this argument.

According to Lazear, workers and firms enter into long-term implicit contracts that discourage shirking and malfeasance by shifting compensation to the end of the contract. Such "delayed payment" contracts are less likely to occur in jobs in which it is comparatively simple to monitor worker effort. This paper uses data from the National Longitudinal Survey and the Dictionary of Occupational Titles to test that hypothesis. In particular, it tests whether jobs that involve repetitive tasks tend to be characterized by an absence of pensions, mandatory retirement, long job tenures, and high wages for older workers.