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

The role of information and communication technologies (ICT) as a driving force for productivity and competitiveness is in the meanwhile well recognized. A look at the country level, however, reveals that the contribution of ICT capital to GDP growth, although still positive, has diminished considerably during the period between 2000 and 2005, compared to the period between 1995 and 2000, in almost all OECD countries. During the same time period the labour force participation of older people has increased owing to demographic changes. This paper provides empirical evidence on the question whether rms' IT-enabled labour productivity is a ected by the age structure of the workforce. Therefore, we take a micro-perspective by analysing rm-level data from German manufacturing and services industries. We nd that workers older than 49 are not signi cantly less productive than prime age workers between 30 and 49, whereas workers younger than 30 are signi cantly less productive than prime age workers. Older workers using a computer are signi cantly more productive than older non-computer users. Moreover, we nd that the signi cantly positive relationship between labour productivity and IT intensity is not a ected by the proportion of older workers. In 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 signi cantly related to labour productivity is supported.

Bertschek, Irene and Jenny Meyer (2008), Do Older Workers Lower IT-Enabled Productivity? Firm-Level Evidence from Germany, ZEW Discussion Paper No. 08-129, Mannheim.