IDEAS home Printed from https://ideas.repec.org/p/ltv/dpaper/201903.html
   My bibliography  Save this paper

Getting Old Is No Picnic? Sector-Specific Relationship Between Workers Age and Firm Productivity

Author

Listed:
  • Konstantins Benkovskis

    (Bank of Latvia)

  • Olegs Tkacevs

    (Bank of Latvia)

Abstract

This study provides new evidence on sector-specific differences in the age-productivity profiles in a country that has witnessed substantial shifts in the economic structure and features flexible labour market and high labour force participation among the elderly. Using a matched employer–employee dataset of Latvian firms, the paper unveils a conventional hump-shaped or downward sloping relationship in manufacturing and trade, but almost no or very small negative effect of ageing workforce in knowledge-intensive service sectors that largely employ high-skilled white-collar employees. The results suggest that investing in human capital, in particular training of elderly employees as well as addressing severe skill shortages in the ICT services sector have to be considered to reduce the downward pressure of ageing on firm performance. It also highlights the importance of efforts made by public institutions in improving health care and promoting healthier lifestyles to increase the number of healthy life years.

Suggested Citation

  • Konstantins Benkovskis & Olegs Tkacevs, 2019. "Getting Old Is No Picnic? Sector-Specific Relationship Between Workers Age and Firm Productivity," Discussion Papers 2019/03, Latvijas Banka.
  • Handle: RePEc:ltv:dpaper:201903
    as

    Download full text from publisher

    File URL: https://datnes.latvijasbanka.lv/papers/discussion/DP_3_2019_en.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Castellucci, Fabrizio & Padula, Mario & Pica, Giovanni, 2011. "The age-productivity gradient: Evidence from a sample of F1 drivers," Labour Economics, Elsevier, vol. 18(4), pages 464-473, August.
    2. Benoit Dostie, 2011. "Wages, Productivity and Aging," De Economist, Springer, vol. 159(2), pages 139-158, June.
    3. Jan Ours, 2009. "Will You Still Need Me: When I’m 64?," De Economist, Springer, vol. 157(4), pages 441-460, December.
    4. Thierry Lallemand & François Rycx, 2009. "Are Older Workers Harmful for Firm Productivity?," De Economist, Springer, vol. 157(3), pages 273-292, September.
    5. Börsch-Supan, Axel & Weiss, Matthias, 2016. "Productivity and age: Evidence from work teams at the assembly line," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 30-42.
    6. James L. Medoff & Katharine G. Abraham, 1980. "Experience, Performance, and Earnings," The Quarterly Journal of Economics, Oxford University Press, vol. 95(4), pages 703-736.
    7. Christian Göbel & Thomas Zwick, 2012. "Age and Productivity: Sector Differences," De Economist, Springer, vol. 160(1), pages 35-57, March.
    8. Jan De Loecker, 2013. "Detecting Learning by Exporting," American Economic Journal: Microeconomics, American Economic Association, vol. 5(3), pages 1-21, August.
    9. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    10. Judith K. Hellerstein & David Neumark, 2007. "Production Function and Wage Equation Estimation with Heterogeneous Labor: Evidence from a New Matched Employer-Employee Data Set," NBER Chapters, in: Hard-to-Measure Goods and Services: Essays in Honor of Zvi Griliches, pages 31-71, National Bureau of Economic Research, Inc.
    11. Anna Zasova, 2011. "Labour market institutions: an obstacle or support to Latvian labour market recovery?," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 11(1), pages 5-24, July.
    12. Liis Roosaar & Jaan Masso & Urmas Varblane, 2017. "The Structural Change And Labour Productivity Of Firms: Do Changes In The Age And Wage Structure Of Employees Matter?," University of Tartu - Faculty of Economics and Business Administration Working Paper Series 103, Faculty of Economics and Business Administration, University of Tartu (Estonia).
    13. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    14. Hellerstein, Judith K & Neumark, David & Troske, Kenneth R, 1999. "Wages, Productivity, and Worker Characteristics: Evidence from Plant-Level Production Functions and Wage Equations," Journal of Labor Economics, University of Chicago Press, vol. 17(3), pages 409-446, July.
    15. Ludmila Fadejeva & Ieva Opmane, 2016. "Internal labour market mobility in 2005–2014 in Latvia: the micro data approach," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 16(2), pages 152-174.
    16. Michael J. Handel, 2012. "Trends in Job Skill Demands in OECD Countries," OECD Social, Employment and Migration Working Papers 143, OECD Publishing.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Börsch-Supan, Axel & Weiss, Matthias, 2016. "Productivity and age: Evidence from work teams at the assembly line," The Journal of the Economics of Ageing, Elsevier, vol. 7(C), pages 30-42.
    2. Paul Hek & Daniel Vuuren, 2011. "Are older workers overpaid? A literature review," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 436-460, August.
    3. Bertoni, Marco & Brunello, Giorgio & Rocco, Lorenzo, 2015. "Selection and the age – productivity profile. Evidence from chess players," Journal of Economic Behavior & Organization, Elsevier, vol. 110(C), pages 45-58.
    4. Stephan Kampelmann & François Rycx, 2012. "Are Occupations Paid What They are Worth? An Econometric Study of Occupational Wage Inequality and Productivity," De Economist, Springer, vol. 160(3), pages 257-287, September.
    5. François Rycx & Yves Saks & Ilan Tojerow, 2015. "Does Education Raise Productivity and Wages Equally ?The Moderating Roles of Age, Gender and Industry," DULBEA Working Papers 15-02, ULB -- Universite Libre de Bruxelles.
    6. Mahlberg, Bernhard & Freund, Inga & Crespo Cuaresma, Jesús & Prskawetz, Alexia, 2013. "Ageing, productivity and wages in Austria," Labour Economics, Elsevier, vol. 22(C), pages 5-15.
    7. Arntz, Melanie & Gregory, Terry, 2014. "What old stagers could teach us: Examining age complementarities in regional innovation systems," ZEW Discussion Papers 14-050, ZEW - Leibniz Centre for European Economic Research.
    8. van Ours, J.C. & Stoeldraijer, L., 2010. "Age, Wage and Productivity," Other publications TiSEM 1521c170-405f-41a4-9bd0-c, Tilburg University, School of Economics and Management.
    9. Andrea Garnero & Stephan Kampelmann & François Rycx, 2014. "The Heterogeneous Effects of Workforce Diversity on Productivity, Wages, and Profits," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 53(3), pages 430-477, July.
    10. Rycx, Francois & Saks, Yves & Tojerow, Ilan, 2016. "Misalignment of Productivity and Wages across Regions? Evidence from Belgian Matched Panel Data," IZA Discussion Papers 10336, Institute of Labor Economics (IZA).
    11. Daniel Vuuren, 2014. "Flexible Retirement," Journal of Economic Surveys, Wiley Blackwell, vol. 28(3), pages 573-593, July.
    12. Romina Giuliano & Stephan Kampelmann & Benoît Mahy & François Rycx, 2017. "Short Notice, Big Difference? The Effect of Temporary Employment on Firm Competitiveness across Sectors," British Journal of Industrial Relations, London School of Economics, vol. 55(2), pages 421-449, June.
    13. Andrea Garnero & François Rycx & Isabelle Terraz, 2020. "Productivity and Wage Effects of Firm‐Level Collective Agreements: Evidence from Belgian Linked Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 58(4), pages 936-972, December.
    14. Pavel Breinek, 2018. "Problems of Older Workers on the Labour Market," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 66(4), pages 1073-1084.
    15. Pekkarinen, Tuomas & Uusitalo, Roope, 2012. "Aging and Productivity: Evidence from Piece Rates," IZA Discussion Papers 6909, Institute of Labor Economics (IZA).
    16. Stoeldraijer, Lenny & van Ours, Jan C, 2010. "Age, wage and productivity," CEPR Discussion Papers 7713, C.E.P.R. Discussion Papers.
    17. Stephan Kampelmann & François Rycx & Yves Saks & Ilan Tojerow, 2018. "Does education raise productivity and wages equally? The moderating role of age and gender," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 7(1), pages 1-37, December.
    18. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    19. Judith K. Hellerstein & David Neumark, 2006. "Using Matched Employer–Employee Data to Study Labor Market Discrimination," Chapters, in: William M. Rodgers III (ed.), Handbook on the Economics of Discrimination, chapter 2, Edward Elgar Publishing.
    20. Christian Pfeifer & Joachim Wagner, 2014. "Age and gender effects of workforce composition on productivity and profits: Evidence from a new type of data for German enterprises," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 8(1), March.

    More about this item

    Keywords

    firm productivity; ageing population; age-productivity profile;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ltv:dpaper:201903. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/bolgvlv.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Konstantins Benkovskis (email available below). General contact details of provider: https://edirc.repec.org/data/bolgvlv.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.