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Ageing, productivity and wages in Austria

  • Mahlberg, Bernhard
  • Freund, Inga
  • Crespo Cuaresma, Jesús
  • Prskawetz, Alexia

The current demographic developments and their consequences for workforce ageing challenge the sustainability of intergenerational transfers and economic growth. A shrinking share of the young workforce will have to support a growing share of elderly, non-working people. Therefore, the productivity of the workforce is central to a sustainable economic future. In order to study the relation between the age structure of employees and labour productivity at the firm level, we use a new matched employer-employee panel data set for Austrian firms spanning the period 2002- 2005. These data allow us to account simultaneously for socio-demographic characteristics of the employees as well as firm heterogeneity to explain labour productivity. Our results clearly show that the age-productivity as well as age-wage profile have a strong industry-specific component. In the service sector, an ageing workforce does not necessarily imply a negative productivity effect. Moreover, we cannot find any evidence for an overpayment of elderly employees.

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Paper provided by Vienna University of Technology, Institute for Mathematical Methods in Economics, Research Group Economics (ECON) in its series ECON WPS - Vienna University of Technology Working Papers in Economic Theory and Policy with number 03/2011.

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Date of creation: 2011
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Handle: RePEc:zbw:tuweco:032011
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  1. Inga Freund & Bernhard Mahlberg & Alexia Prskawetz, 2012. "A Matched Employer-Employee Panel Data Set for Austria: 2002-2005," Working Paper Series of the German Council for Social and Economic Data 206, German Council for Social and Economic Data (RatSWD).
  2. Jan C. van Ours & Lenny Stoeldraijer, 2010. "Age, Wage and Productivity," CESifo Working Paper Series 2965, CESifo Group Munich.
  3. Abowd, John M. & Kramarz, Francis, 1999. "The analysis of labor markets using matched employer-employee data," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 40, pages 2629-2710 Elsevier.
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  6. Alexia Prskawetz & Bernhard Mahlberg & Vegard Skirbekk, 2007. "Firm Productivity, Work-force Age and Educational Structure in Austrian Industries in 2001," Chapters, in: Population Aging, Intergenerational Transfers and the Macroeconomy, chapter 3 Edward Elgar Publishing.
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  12. Thierry Lallemand & François Rycx, 2009. "Are Older Workers Harmful for Firm Productivity?," De Economist, Springer, vol. 157(3), pages 273-292, September.
  13. Alexia Prskawetz & Thomas Fent, 2007. "Workforce Ageing And The Substitution Of Labour: The Role Of Supply And Demand Of Labour In Austria," Metroeconomica, Wiley Blackwell, vol. 58(1), pages 95-126, 02.
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  16. 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 409-46, July.
  17. Ana Cardoso & Paulo Guimarães & José Varejão, 2011. "Are Older Workers Worthy of Their Pay? An Empirical Investigation of Age-Productivity and Age-Wage Nexuses," De Economist, Springer, vol. 159(2), pages 95-111, June.
  18. Stoeldraijer, Lenny & van Ours, Jan C, 2010. "Age, wage and productivity," CEPR Discussion Papers 7713, C.E.P.R. Discussion Papers.
  19. Ilmakunnas, Pekka & Maliranta, Mika, 2007. "Aging, Labor Turnover and Firm Performance," Discussion Papers 1092, The Research Institute of the Finnish Economy.
  20. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  21. van Ours, Jan C., 2009. "Will You Still Need Me – When I'm 64?," IZA Discussion Papers 4264, Institute for the Study of Labor (IZA).
  22. Anna Cristina D'Addio & Mark Keese & Edward Whitehouse, 2010. "Population ageing and labour markets," Oxford Review of Economic Policy, Oxford University Press, vol. 26(4), pages 613-635, Winter.
  23. Patrick Aubert & Bruno Crépon, 2003. "La productivité des salariés âgés : une tentative d'estimation," Économie et Statistique, Programme National Persée, vol. 368(1), pages 95-119.
  24. Börsch-Supan, Axel & Düzgün, Ismail & Weiss, Matthias, 2005. "Altern und Produktivität: Zum Stand der Forschung," MEA discussion paper series 05073, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  25. Judith K. Hellerstein & David Neumark, 1995. "Are Earnings Profiles Steeper Than Productivity Profiles? Evidence from Israeli Firm-Level Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 89-112.
  26. 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.
  27. Göbel, Christian & Zwick, Thomas, 2009. "Age and productivity: evidence from linked employer employee data," ZEW Discussion Papers 09-020, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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