Ageing and productivity: evidence from a matched employer-employee data set at the sector-level

Bernhard Mahlberg, Austrian Institute for Industrial Research
Inga Freund, Vienna University of Technology
Alexia Fürnkranz-Prskawetz, Vienna University of Technology

The workforce will age and shrink in most industrialized countries during the next decades. Whether these demographic developments might imply reduced productivity and lower economic growth will essentially depend on the productivity of an ageing workforce. So far research on the age-productivity profile has mainly been carried out at the individual, macro and firm level. In this paper we close a gap in the literature by analysing the link between the age structure of the labour force and average labour productivity at an inter-mediate level, i.e. within certain economic sectors. The analysis is based on a panel data set over six years (2002-2007) for the Austrian sectors of mining, manufacturing and market oriented services. Our results indicate a positive correlation of the share of older workers and productivity. The results for the share of younger workers are less clear-cut.