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The Impact of Workforce Age Heterogeneity on Company Productivity

Uschi Backes-Gellner and Stephan Veen

No 78, Working Papers from University of Zurich, Institute for Strategy and Business Economics (ISU)

Abstract: We analyse how the age structure of a company’s workforce affects company performance using a linked employer employee panel dataset. With demographic changes at hand, this is of utmost importance for firms and organisations. Focussing on the organizational, not the individual level, we examine the effect of changes in age heterogeneity of a company’s workforce on company productivity. Incorporating theoretical insights and empirical results on aging and age diversity from multiple and very diverse disciplines, we conduct a cost-benefit analysis to evaluate how changes in age heterogeneity may affect organizational performance. Our dataset contains more than 18,000 German firms and 2 million employees over 10 years. We find significant effects of age heterogeneity on firm productivity, and that these effects are particularly moderated by type of tasks. There are positive productivity effects of increasing age heterogeneity, but only for companies and workforces conducting innovative or creative tasks.

Keywords: age heterogeneity; demographic change; organizational performance; productivity effects (search for similar items in EconPapers)
JEL-codes: J10 J24 J82 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2008-02, Revised 2009-09
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