Do Older Workers Lower IT-Enabled Productivity? Firm-Level Evidence from Germany

Abstract

Die Dis cus si on Pape rs die nen einer mög lichst schnel len Ver brei tung von neue ren For schungs arbei ten des ZEW. Die Bei trä ge lie gen in allei ni ger Ver ant wor tung der Auto ren und stel len nicht not wen di ger wei se die Mei nung des ZEW dar.Dis cus si on Papers are inten ded to make results of ZEW research prompt ly avai la ble to other eco no mists in order to encou ra ge dis cus si on and sug gesti ons for revi si ons. The aut hors are sole ly respon si ble for the con tents which do not neces sa ri ly repre sent the opi ni on of the ZEW.Download this ZEW Discussion Paper from our ftp server:ftp://ftp.zew.de/pub/zew-docs/dp/dp08129.pdf This paper provides empirical evidence on the question whether firms' IT-enabled labour productivity is affected by the age structure of the workforce. Therefore, we take a micro-perspective by analysing firm-level data from German manufacturing and services industries. We find that workers older than 49 are not significantly less productive than prime age workers between 30 and 49, whereas workers younger than 30 are significantly less productive than prime age workers. Older workers using a computer are significantly more productive than older non-computer users. Moreover, we find that the significantly positive relationship between labour productivity and IT intensity is not affected by the proportion of older workers. Non-Technical SummaryIn a further step, we take account of the fact that companies might employ only the best or most productive older workers while less productive employees leave the labour market either actively or passively via early retirement programmes, for instance. However, the previously found result that the percentage of older workers is not significantly related to labour productivity is supported. December 2008Abstract The paper provides empirical evidence for the question whether firms' ITenabled labour productivity is affected by the age structure of the workforce.We apply a production function approach with heterogenous labour to firmlevel data from German manufacturing and services industries. We find that workers older than 49 are not significantly less productive than prime age workers, whereas workers younger than 30 are significantly less productive than prime age workers. Older workers using a computer are significantly more productive than older non-computer users. The positive and significant relationship between labour productivity and IT intensity is not affected by the proportion of older workers.JEL-classification: J14, J24, O33

Does it pay to be productive? The case of age groups

“…Tang and MacLeod (2006), using panel data to evaluate productivity growth in ten Canadian provinces, find a negative and significant impact of the share of older workers (aged 55 and more) on productivity growth (measured by GDP). By contrast, Bertschek and Meyer (2008) analyse a panel of firm level data for the German manufacturing and service industries, measure productivity by sales per workers and find that older workers (aged 49 and more) are not less productive than prime age workers, while younger workers (aged less than 30) would be less productive than prime age workers. In particular, they find that technological progress, proxied by the use of computer, has a positive impact on older workers productivity.…”

ICT and Global Sourcing - Evidence for German Manufacturing and Service Firms

“…On the one hand, the share of employees working predominantly with the personal computer (PC) is considered. This measure can be interpreted as a measure for a firm's overall ICT intensity and alternatively for labour heterogeneity (Bertschek and Meyer (2009)). It measures part of a firm's hardware and software equipment as well as it reflects the extent of the firm's use of the computer as a working tool within its business model.…”

Combining Technology and Work Organization: An Analysis of Complementarity between IT and Decentralization across Firms of Different Size

“…Bertschek and Meyer (2009)), the estimate for the share of employees working mainly at the computer is significantly positive, too. This result indicates that higher computer work shares are linked with higher productivity levels.…”

“…Since the data includes information on a firm's share of employees working mainly at the computer, I use it as an additional measure for a firm's overall IT intensity. The share of employees working mainly with the PC can be interpreted as a measure for IT capital or alternatively for labour heterogeneity (Bertschek and Meyer (2009)). This IT measure captures…”

“…Moreover, firms with a higher share of employees working mainly at the computer are likely to use enterprise software systems more intensively, too. Additionally, the computer work share can be regarded as measure for labour heterogeneity (Bertschek and Meyer (2009)). …”