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Old Workers, New Capital

Author

Listed:
  • Philippe d'Astous
  • Thomas Geelen
  • Jakub Hajda

Abstract

How does workforce aging affect corporate investment? We investigate this question using comprehensive matched employer-employee data. Exploiting variation in the age of newly hired workers, we find that firms hiring older workers significantly boost capital investment. Specifically, a typical increase in the average age of new hires raises investment rates by 0.3 percentage points—a 2.6% increase relative to the sample mean. To establish causality, we implement a shift-share instrumental variable approach that leverages industry-level demographic trends interacted with firms’ initial workforce composition. Our results are consistent with a model where firms optimally choose between hiring younger and older workers who differ in productivity and wages.

Suggested Citation

  • Philippe d'Astous & Thomas Geelen & Jakub Hajda, 2025. "Old Workers, New Capital," Cahiers de recherche / Working Papers 20, Institut sur la retraite et l'épargne / Retirement and Savings Institute.
    • Handle: RePEc:rsi:irersi:20
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    File URL: https://ire.hec.ca/wp-content/uploads/2025/12/cahier_IRE_20_old_workers_new_capital.pdf
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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • J1 - Labor and Demographic Economics - - Demographic Economics

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