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Does it pay to be productive? The case of age groups

Does it pay to be productive? The case of age groups Purpose – The purpose of this paper is to evaluate empirically the relationship between workforce age, wage and productivity at the firm level. Design/methodology/approach – Panel data techniques are applied to Belgian data on private sector workers and firms during 1999‐2006. Findings – Results (robust to various potential econometric issues, including unobserved firm heterogeneity, endogeneity and state dependence) suggest that older workers are significantly less productive than prime age and young workers. In contrast, the productivity of middle‐aged workers is not found to be significantly different compared to young workers. Findings further indicate that average hourly wages within firms increase significantly with workers’ age. Overall, this leads to the conclusion that young (older) workers appear to be “underpaid” (“overpaid”). Originality/value – These findings contribute to the growing literature on how the workforce age structure affects productivity and wages. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Manpower Emerald Publishing

Does it pay to be productive? The case of age groups

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Publisher
Emerald Publishing
Copyright
Copyright © 2012 Emerald Group Publishing Limited. All rights reserved.
ISSN
0143-7720
DOI
10.1108/01437721211234156
Publisher site
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Abstract

Purpose – The purpose of this paper is to evaluate empirically the relationship between workforce age, wage and productivity at the firm level. Design/methodology/approach – Panel data techniques are applied to Belgian data on private sector workers and firms during 1999‐2006. Findings – Results (robust to various potential econometric issues, including unobserved firm heterogeneity, endogeneity and state dependence) suggest that older workers are significantly less productive than prime age and young workers. In contrast, the productivity of middle‐aged workers is not found to be significantly different compared to young workers. Findings further indicate that average hourly wages within firms increase significantly with workers’ age. Overall, this leads to the conclusion that young (older) workers appear to be “underpaid” (“overpaid”). Originality/value – These findings contribute to the growing literature on how the workforce age structure affects productivity and wages.

Journal

International Journal of Manpower – Emerald Publishing

Published: Jun 8, 2012

Keywords: Belgium; Private sector organizations; Pay structures; Workforce age; Productivity; Wages; Linked panel data

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