Aging and Productivity: State of Research

Munich, February 2017. There is a wide-spread assumption that older workers are less productive – which would result in a negative effect on overall productivity due to the increasing number of elderly employees. This assumption is contradicted by MEA studies concerning productivity and age.

Studies in gerontology and sociology show, that experience and general education increase with age, while wit and the ability to combine decrease with age. But the individual aging process and therefore the performance depend also on a variety of additional factors, among them socio-economic status and social environment belong to them. For example people with higher income show better physical fitness.

Occupational medics have also examined the relationship between aging and productivity. They found out, that physical and psychic capacity, especially the speed of perceiving signals, decrease with age. Nevertheless one finds clear differences among people in the same age group. These differences can be explained by varying working conditions and training of the human information processing system. Thus, performance and productivity cannot generally be defined through age. They depend definitely on individual working conditions. This causes the varying productivity among individuals during their life cycle. Ergonomists can therefore not prove a common deficit-hypothesis of aging, the assumption of the degradation of abilities over lifetime.

Even the aggregated perspective shows differing correlations of age and productivity. Studies on the wage structure even unravel a positive correlation between wages and age, which can be interpreted as the seniority specific productivity. Employees in public service for example are paid according to their age disregarding their actual productivity. In contrast, among sales workers, wages rise only to the age of 55 and decrease afterwards.

Out of a general analysis of detailed research fields, the researchers conclude, that productivity in a modern working society is more realised in collective cooperation than on the individual level. Especially invisible contributions of older employees to value added like experience and balance in conflicts are realised only in the group result, but are not measurable in individual measures of exposure and cognition. Because of that, one should not focus on individual measurements and instead consider the average age and the age structure of a work group to conclude to productivity.

This was done in a MEA study by Axel Börsch-Supan and Matthias Weiss (2016), which combines data on errors occurring in the production process of a truck assembly plant with sociodemographic information about the workers.

The results show that the average productivity of a worker continuously increases until the age of retirement (65 years), even in a work environment that requires physical fitness. This is – among other things – due to the experience of older workers. They do not make fewer mistakes than younger ones, but less serious mistakes. Studying the productivity of work teams shows that older workers can use their skills to handle difficult situations more effective and support their younger colleagues.

Börsch-Supan, Axel; Weiss, Matthias (2016): "Productivity and age: Evidence from work teams at the assembly line". In: The Journal of the Economics of Ageing, online first (doi:10.1016/j.jeoa.2015.12.001)

Trends in German households' portfolio behavior - assessing the importance of age- and cohort-effects MEA Discussion Paper: 073-05, Axel Börsch-Supan, Ismail Düzgün, Matthias Weiss