Age, Technology and Labour Costs

IGIER Working Paper No. 309

51 Pages Posted: 7 Apr 2006

See all articles by Francesco Daveri

Francesco Daveri

University of Parma - Dipartimento di Economia; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research

Mika Maliranta

ETLA, The Research Institute of the Finnish Economy

Date Written: March 2006

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.

Keywords: Aging, technology, TFP, wage determination, Finland, new economy, growth

JEL Classification: D24, J24, J31, E60

Suggested Citation

Daveri, Francesco and Maliranta, Mika, Age, Technology and Labour Costs (March 2006). IGIER Working Paper No. 309, Available at SSRN: https://ssrn.com/abstract=895080 or http://dx.doi.org/10.2139/ssrn.895080

Francesco Daveri (Contact Author)

University of Parma - Dipartimento di Economia ( email )

Via Kennedy 6
Parma, Parma 43100
Italy
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+39 0521 032402 (Fax)

HOME PAGE: http://www.igier.uni-bocconi.it/daveri/

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

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Milan, 20136
Italy
+39 02 5836 3325 (Phone)
+39 02 5836 3302 (Fax)

Mika Maliranta

ETLA, The Research Institute of the Finnish Economy ( email )

Lonnrotink. 4 B
FIN-00120 Helsinki, 00120
Finland
+358 9 609900 (Phone)
+358 9 601753 (Fax)

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