Working Paper
309.
Age, Technology and Labour Costs
by Francesco Daveri and Mika Maliranta
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 codes: D24, J24, J31, E60
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