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The Impact of Workforce Age Heterogeneity on Company Productivity

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Author Info
Uschi Backes-Gellner () (Institute for Strategy and Business Economics, University of Zurich)
Stephan Veen () (Institute for Strategy and Business Economics, University of Zurich)

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Abstract

We analyse how the age structure of a company’s workforce affects company performance using a linked employer employee panel dataset. With demographic changes at hand, this is of utmost importance for firms and organisations. Focussing on the organizational, not the individual level, we examine the effect of changes in age heterogeneity of a company’s workforce on company productivity. Incorporating theoretical insights and empirical results on aging and age diversity from multiple and very diverse disciplines, we conduct a cost-benefit analysis to evaluate how changes in age heterogeneity may affect organizational performance. Our dataset contains more than 18,000 German firms and 2 million employees over 10 years. We find significant effects of age heterogeneity on firm productivity, and that these effects are particularly moderated by type of tasks. There are positive productivity effects of increasing age heterogeneity, but only for companies and workforces conducting innovative or creative tasks.

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Publisher Info
Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Working Papers with number 0078.

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Length: 44 pages
Date of creation: Feb 2008
Date of revision: Sep 2009
Handle: RePEc:iso:wpaper:0078

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Related research
Keywords: age heterogeneity; demographic change; organizational performance; productivity effects;

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Find related papers by JEL classification:
J10 - Labor and Demographic Economics - - Demographic Economics - - - General
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition

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References listed on IDEAS
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  1. Susanna Iranzo & Fabiano Schivardi & Elisa Tosetti, 2006. "Skill dispersion and firm productivity; an analysis with employer-employee matched data," Temi di discussione (Economic working papers) 577, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
  2. Axel Börsch-Supan & Ismail Düzgün & Matthias Weiss, 2005. "Altern und Produktivität: Zum Stand der Forschung," MEA discussion paper series 05073, Mannheim Research Institute for the Economics of Aging (MEA), University of Mannheim. [Downloadable!]
    Other versions:
  3. Axel Börsch-Supan, 2003. "Labor Market Effects of Population Aging," LABOUR, CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, vol. 17(SpecialIs), pages 5-44, 08. [Downloadable!] (restricted)
  4. Francesco Daveri & Mika Maliranta, 2007. "Age, seniority and labour costs: lessons from the Finnish IT revolution," Economic Policy, CEPR, CES, MSH, vol. 22, pages 117-175, 01. [Downloadable!] (restricted)
  5. Gary Charness & Marie-Claire Villeval, 2007. "Cooperation, Competition, and Risk Attitudes: An Intergenerational Field and Laboratory Experiment," IZA Discussion Papers 2574, Institute for the Study of Labor (IZA). [Downloadable!]
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  6. Addison, John T. & Schank, Thorsten & Schnabel, Claus & Wagner, Joachim, 2003. "German Works Councils in the Production Process," IZA Discussion Papers 812, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Alda, Holger & Bender, Stefan & Gartner, Hermann, 2005. "The linked employer-employee dataset of the IAB (LIAB)," IAB Discussion Paper 200506, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
  8. Sean Nicholson & Marc V. Pauly & Daniel Polsky & Claire Sharda & Helena Szrek, 2004. "Measuring the Effects of Workloss on Productivity With Team Production," NBER Working Papers 10632, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  9. Haltiwanger, John C. & Lane, Julia I. & Spletzer, James R., 2007. "Wages, productivity, and the dynamic interaction of businesses and workers," Labour Economics, Elsevier, vol. 14(3), pages 575-602, June. [Downloadable!] (restricted)
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  10. Ruth Stock, 2004. "Drivers Of Team Performance: What Do We Know And What Have We Still To Learn?," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(3), pages 274-306, July. [Downloadable!]
  11. Christian Grund & Niels Westergård-Nielsen, 2005. "Age Structure of the Workforce and Firm Performance," IZA Discussion Papers 1816, Institute for the Study of Labor (IZA). [Downloadable!]
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  12. Lazear, Edward P, 1999. "Globalisation and the Market for Team-Mates," Economic Journal, Royal Economic Society, vol. 109(454), pages C15-40, March. [Downloadable!] (restricted)
  13. Gartner, Hermann, 2005. "The imputation of wages above the contribution limit with the German IAB employment sample," FDZ Methodenreport 200502_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
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