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Workforce ageing and productivity: An analysis by industry characteristics

Author

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  • Vassiliki Koutsogeorgopoulou
  • Jen-Hsuan Yu

Abstract

A better understanding of the links between productivity growth and workforce ageing is crucial against a backdrop of rapid demographic headwinds. This paper examines how workforce ageing affects productivity, using industry-level data for 32 OECD countries from 2008 to 2023. It finds that workforce ageing does not exert a direct effect on industry productivity on average. However, considerable heterogeneous effects emerge when workforce ageing is examined jointly with industry characteristics. An ageing workforce is associated with lower productivity in skill and ICT intensive industries and those with skill mismatches. Conversely, workers' experience is associated with higher productivity in industries with high labour demand and high age diversity, highlighting the benefits of multigenerational workforces, and, on more tentative evidence, in industries with educated workforces. Workforce ageing therefore does not act as a first-order drag on productivity on average; rather, it reshapes productivity through various plausible channels, with potential implications for reallocation and allocative efficiency. Policies focusing on lifelong learning, job mobility among older workers, multigenerational workforces and healthy ageing can mitigate the adverse productivity effects of workforce ageing and reinforce positive synergies.

Suggested Citation

  • Vassiliki Koutsogeorgopoulou & Jen-Hsuan Yu, 2026. "Workforce ageing and productivity: An analysis by industry characteristics," OECD Economics Department Working Papers 1879, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1879-en
    DOI: 10.1787/69be1541-en
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    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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