Ageing, Productivity and Wages in Austria

Abstract:     
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 labor 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 labor 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.

Number of Pages in PDF File: 34

Keywords: age-productivity, wage profile, employer-employee data, sector affiliation

JEL Classification: J14, J24, J82

working papers series