Scandinavian Working Papers in Economics

Arbetsrapport,
Institute for Futures Studies

No 2005:17: Productivity consequences of workforce ageing - Stagnation or a Horndal effect?

Bo Malmberg (), Thomas Lindh () and Max Halvarsson
Additional contact information
Bo Malmberg: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden
Thomas Lindh: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden
Max Halvarsson: Institute for Futures Studies, Postal: Box 591, SE-101 31 Stockholm, Sweden

Abstract: Data linking the production of value-added at the plant level to the individual employees provide an opportunity to deepen the understanding of how the labor force composition relates to productivity performance. In view of the anticipated aging of the workforce in industrialised economies a body of research has emerged that indicate that individual productivity has a more pronounced hump-shape than the wage profile. This paper studies these issues by examining the composition of the workforce at the plant level in relation to the productivity performance of the plants. Our data cover the Swedish mining and manufacturing industries 1985-1996. The fact that older workers selectively work with older capital may have biased results found in the literature. Endogeneity of workforce composition poses serious estimation problems, but our attempts to cope with these problems tend to indicate that biases in general go in the direction that productivity of the young is overestimated and the productivity of the old is underestimated.

Keywords: workforce ageing; productivity growth

JEL-codes: J10; J21; J24

43 pages, December 12, 2005

Price: 25 SEK

Note: ISSN 1652-120X ISBN 91-89655-75-3

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