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Age, Technology and Labour Costs

Author

Listed:
  • Daveri, Francesco
  • Maliranta, Mika

Abstract

Is the process of workforce aging a burden or a blessing for the firm? Our paper seeks to answer this question by providing evidence on the age-productivity and age-earnings profiles for a sample of plants in three manufacturing industries (forest, industrial machinery and electronics) in Finland. Our main result is that exposure to rapid technological and managerial changes does make a difference for plant productivity, less so for wages. In electronics, the Finnish industry undergoing a major technological and managerial shock in the 1990s, the response of productivity to age-related variables is first sizably positive and then becomes sizably negative as one looks at plants with higher average seniority and experience. This declining part of the curve is not there either for the forest industry or for industrial machinery. It is not there either for wages in electronics. These conclusions survive when a host of other plausible productivity determinants (notably, education and plant vintage) are included in the analysis. We conclude that workforce aging may be a burden for firms in high-tech industries and less so in other industries.

Suggested Citation

  • Daveri, Francesco & Maliranta, Mika, 2006. "Age, Technology and Labour Costs," Discussion Papers 1010, The Research Institute of the Finnish Economy.
    • Handle: RePEc:rif:dpaper:1010
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    File URL: http://www.etla.fi/wp-content/uploads/2012/09/dp1010.pdf
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    Cited by:

    1. repec:hal:spmain:info:hdl:2441/6144 is not listed on IDEAS
    2. Göbel, Christian & Zwick, Thomas, 2010. "Which personnel measures are effective in increasing productivity of old workers?," ZEW Discussion Papers 10-069, ZEW - Leibniz Centre for European Economic Research.
    3. repec:hal:wpspec:info:hdl:2441/6144 is not listed on IDEAS
    4. Sandrine Levasseur, 2008. "Progrès technologique et employabilité des seniors," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(3), pages 155-184.
    5. Christian Göbel & Thomas Zwick, 2012. "Age and Productivity: Sector Differences," De Economist, Springer, vol. 160(1), pages 35-57, March.
    6. repec:spo:wpmain:info:hdl:2441/6144 is not listed on IDEAS
    7. Carone, Giuseppe & Denis, Cécile & Mc Morrow, Kieran & Mourre, Gilles & Röger, Werner, 2006. "Long-term labour productivity and GDP projections for the EU25 Member States : a production function framework," MPRA Paper 744, University Library of Munich, Germany.
    8. repec:spo:wpecon:info:hdl:2441/6144 is not listed on IDEAS

    More about this item

    Keywords

    Aging; technology; TFP; wage determination; Finland; new economy; growth;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General

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