Age, productivity and geography: Evidence from Austria

Dr. Bernhard Mahlberg (IWI) referiert im Rahmen des Kolloquiums „Raum & Wirtschaft“ (Wirtschaftsuniversität Wien, Institut für Wirtschaftsgeographie und Geoinformatik) zu seinem aktuellen Forschungsprojekt “Productivity, Wages and Training in Ageing Societies”.


The foreseen shrinking and ageing of the labour force in most industrialised countries will put a significant burden on the social security system. To preserve the sustainability of the welfare system, productivity growth needs to be sustained. Besides, technological progress, human capital investment, economic structure, etc., the age structure of the workforce has an important impact on economic productivity. The question arises whether an ageing workforce might hamper economic productivity and therefore increase the “demographic burden” (the relation between retired and working persons) even further. To disentangle the relationship between economic productivity and the age structure of the workforce, we follow mainstream literature that currently argues that the firm level constitutes one of the most promising levels of analysis since it controls for the structural constraints the workforce is confronted with. We base our study on a recently created panel data set of matched employer-employee data for Austria that became available in September 2008. Currently the dataset covers the years 2002-2005 and during the ongoing project the data will be updated continuously. The first objective of the project is to verify whether a higher share of older workers negatively effects firm-level productivity for Austria. By applying advanced panel regression methods we can control for unobserved (time-invariant) heterogeneity and the endogeneity of independent variables. Another objective is to test for the sensitivity of the results with respect to the representation of the workforce age structure. Obviously it is the age composition of the workforce — as characterised by the mean as well as the variance of age distribution — that matters for firm-level productivity. The third objective of our proposal is to contrast the age-productivity profile with the age-wage profile at the firm level. Based on the theoretical and empirical literature so far, we expect that these measures diverge, with wages being below productivity at lower ages and above productivity at older ages. The fourth objective of the project is to also control for training at the firm level, too. We will test whether the age-productivity relation changes when we control for training at the firm level. Moreover, we shall also investigate who gains most from training by investigating the effect of training on firm-level productivity versus its effect on the wage sum. Finally we will also conduct our analysis on the sector level (as opposed to the firm level) to test whether external productivity effects emerge between firms within the same sector.

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