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Do older workers really reduce firm productivity?

Published online by Cambridge University Press:  01 January 2023

Bokwon Lee ,
Joowoong Park  and
Jae-Suk Yang
Bokwon Lee
Affiliation:
Korea Advanced Institute of Science and Technology (KAIST), Republic of Korea; Ministry of Economy and Finance, Korea
Jae-Suk Yang*
Affiliation:
Korean Advanced Institute of Science and Technology (KAIST), Republic of Korea
*
Jae-Suk Yang, Moon Soul Graduate School of Future Strategy, Korean Advanced Institute of Science and Technology (KAIST), Daejeon 34141, Republic of Korea. Email: yang@kaist.ac.kr
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Abstract

In this article, we examine the effect of workforce ageing on company productivity, using an analysis based on Korean firms. We found that an increase in the ratio of workers aged over 50 years to total workers had a negative effect on value added per worker, which was consistent with the findings of most previous studies based on European data. However, the results of the analysis, including various classifications such as size, industry and several financial conditions, revealed that an increase in the ratio of older workers had positive effects on value added per worker in large manufacturing firms under risky or growing conditions. As the productivity of older workers may vary, future research may determine under what conditions – size, industry, region and financial conditions – older workers contribute positively to productivity. Firms with financial troubles or those planning to downsize should be cautious about laying off older workers as an approach to improving organisational performance because these workers contribute positively to productivity under certain conditions.

Keywords

J24J54N3Ageingfinancial conditionsfirm sizehuman capitalproductivityRepublic of Korea
Type
Articles
Information
The Economic and Labour Relations Review , Volume 29 , Issue 4: Symposia: Global Financial Crisis 10 Years On; Full Employment White Paper , December 2018 , pp. 521 - 542
Copyright
© The Author(s) 2018

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