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Do older workers really reduce firm productivity?

Author

Listed:
  • Bokwon Lee

    (Korea Advanced Institute of Science and Technology (KAIST), Republic of Korea; Ministry of Economy and Finance, Korea)

  • Joowoong Park
  • Jae-Suk Yang

    (Korean Advanced Institute of Science and Technology (KAIST), Republic of Korea)

Abstract

In this article, we examine the effect of workforce ageing on company productivity, using an analysis based on Korean firms. We found that an increase in the ratio of workers aged over 50 years to total workers had a negative effect on value added per worker, which was consistent with the findings of most previous studies based on European data. However, the results of the analysis, including various classifications such as size, industry and several financial conditions, revealed that an increase in the ratio of older workers had positive effects on value added per worker in large manufacturing firms under risky or growing conditions. As the productivity of older workers may vary, future research may determine under what conditions – size, industry, region and financial conditions – older workers contribute positively to productivity. Firms with financial troubles or those planning to downsize should be cautious about laying off older workers as an approach to improving organisational performance because these workers contribute positively to productivity under certain conditions. JEL Codes: J24, J54, N3

Suggested Citation

  • Bokwon Lee & Joowoong Park & Jae-Suk Yang, 2018. "Do older workers really reduce firm productivity?," The Economic and Labour Relations Review, , vol. 29(4), pages 521-542, December.
    • Handle: RePEc:sae:ecolab:v:29:y:2018:i:4:p:521-542
    DOI: 10.1177/1035304618811008
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    References listed on IDEAS

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    Cited by:

    1. Kim, Hoolda & Song Lee, Bun, 2023. "Aging workforce, wages, and productivity: Do older workers drag productivity down in Korea?," The Journal of the Economics of Ageing, Elsevier, vol. 24(C).

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    More about this item

    Keywords

    Ageing; financial conditions; firm size; human capital; productivity; Republic of Korea;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J54 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Producer Cooperatives; Labor Managed Firms
    • N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy

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