Age structure of the workforce and firm performance
Purpose - Given the ongoing demographic change in European countries, this paper aims to explore empirically the link between age structures of employees in firms and firm performance. Design/methodology/approach - Based on theoretical considerations, the paper examines the link between both the average age and the standard deviation of employees' age and firms' value added per employee. Linked employer employee data of all private-sector firms in Denmark with at least 20 employees is used. Findings - A pyramidal or inverse U-shaped interrelation is found between mean age and standard deviation of age and value added per employee, respectively. Research limitations/implications - It would be interesting to determine whether the results hold for different countries with other institutional environments. Originality/value - This is the first paper to examine the link between corporate age structures and firm performance for a whole country. The paper gives insights for both academic scholars and practitioners, who may take the results into account in formulating an efficient personnel policy.
Volume (Year): 29 (2008)
Issue (Month): 5 (August)
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References listed on IDEAS
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- Lazear, Edward P & Rosen, Sherwin, 1981.
"Rank-Order Tournaments as Optimum Labor Contracts,"
Journal of Political Economy,
University of Chicago Press, vol. 89(5), pages 841-864, October.
- Edward P. Lazear & Sherwin Rosen, 1979. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc.
- Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
- Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
- Jacques Cremer, 1986. "Cooperation in Ongoing Organizations," The Quarterly Journal of Economics, Oxford University Press, vol. 101(1), pages 33-49.
- Bengt Holmström, 1999. "Managerial Incentive Problems: A Dynamic Perspective," Review of Economic Studies, Oxford University Press, vol. 66(1), pages 169-182.
- Fama, Eugene F, 1980. "Agency Problems and the Theory of the Firm," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 288-307, April.
- George Akerlof, 1976. "The Economics of Caste and of the Rat Race and Other Woeful Tales," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 599-617.
- Bengt Holmstrom, 1999. "Managerial Incentive Problems: A Dynamic Perspective," NBER Working Papers 6875, National Bureau of Economic Research, Inc. Full references (including those not matched with items on IDEAS)
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