Which Personnel Measures are Effective in Increasing Productivity of Old Workers?

In most Western industrialised countries the workforce is ageing rapidly. If the productivity contributions of old workers are low, dealing with increasing shares of old employees could be decisive for the competitiveness of establishments. A large fraction of establishments already uses specific measures for old employees (SMOE) to cope with aging workforces. In this paper, we investigate whether the application of SMOE leads to an increase in relative productivity of old employees. Despite the widespread use of these measures, to our knowledge, this is the first attempt to investigate this topic. In order to study the relation between SMOE and the relative productivity of old workers, we compare age-productivity profiles for different subgroups of establishments. A representative linked employer-employee panel data set allows us to calculate establishment age-productivity profiles and to split the sample into establishments that use SMOE and those that do not use them. We find that a change in work requirements and specific equipment of workplaces for old employees are associated with a significantly higher relative productivity of old employees. Establishments that apply age mixed working groups are characterised by higher productivity of old employees and young employees. This might be an indication of important complementarity effects between age groups. Finally, flexible working times for old employees and the inclusion of old employees in training measures are not associated with differences in the age productivity profiles. We argue that missing effects of these measures might be a consequence of wrong implementation. Overall, the application of certain SMOE is associated with significantly higher relative productivity of the targeted age groups. Our findings therefore suggest that SMOE are an effective way to raise the relative productivity contribution of old workers.

Göbel, Christian and Thomas Zwick (2010), Which Personnel Measures are Effective in Increasing Productivity of Old Workers?, ZEW Discussion Paper No. 10-069, Mannheim, published in: Labour Economics.