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Aging, Labor Turnover and Firm Performance

Pekka Ilmakunnas () and Mika Maliranta ()

No 1092, Discussion Papers from The Research Institute of the Finnish Economy

Abstract: We study whether older workers are costly to firms. Our estimation equations are derived from a variant of the decomposition methods frequently used for measuring micro-level sources of industry productivity growth. By using comprehensive linked employer-employee data from the Finnish business sector, we study the productivity and wage effects, and hence the profitability effects, of hiring and separation of younger and older workers. The evidence shows that separations of older workers are profitable to firms, especially in the manufacturing ICT-industries. Robustness checks include the use of regional labor supply and other variables as instruments for the potential endogeneity of the labor flows.

Keywords: aging; productivity; wage; profits; hiring; separation; employer-employee data (search for similar items in EconPapers)
JEL-codes: C43 J23 J24 J63 M51 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2007
New Economics Papers: this item is included in nep-age, nep-bec, nep-eff and nep-lab
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