Ageing , productivity and wages in Austria 1

The current demographic developments and their consequences for workforce ageing challenge the sustainability of intergenerational transfers and economic growth. A shrinking share of the young workforce will have to support a growing share of elderly, non-working people. Therefore, the productivity of the workforce is central to a sustainable economic future. In order to study the relation between the age structure of employees and labour productivity at the firm level, we use a new matched employer-employee panel data set for Austrian firms spanning the period 20022005. These data allow us to account simultaneously for socio-demographic characteristics of the employees as well as firm heterogeneity to explain labour productivity. Our results clearly show that the age-productivity as well as age-wage profile have a strong industry-specific component. In the service sector, an ageing workforce does not necessarily imply a negative productivity effect. Moreover, we cannot find any evidence for an overpayment of elderly employees. JEL Codes: J14, J24, J82 Key-Words: age-productivity/ -wage profile, employer-employee data, sector affiliation 1 The authors would like to thank Statistics Austria for setting up the data used in this study as well as for valuable support. Moreover the authors would like to thank Elsa Fontainha, Stefan Staubli and Thomas Zwick as well as the participants of the 6th European Workshop on Labour Markets and Demographic Change, the Annual Meeting of the Austrian Economic Association (NOeG 2011) and the XII European Workshop on Efficiency and Productivity Analysis (EWEPA 2011) for valuable comments on earlier versions of this paper. The authors acknowledge funding from the Austrian Science Fund (FWF) under project number P21475G16. The usual disclaimer applies. # Corresponding author: [email protected], Phone +43-1-5134411-2040, Fax +43-1-51344112099 (Institute for Industrial Research, Mittersteig 10/4, 1050 Vienna, Austria)