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Wages, Productivity and Aging

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Abstract

In this article, we estimate age-based wage and productivity differentials using Canadian linked employer-employee data from the Workplace and Employee Survey 1999–2005. We use data at the workplace level to estimate production functions, taking into account the age profile of its workforce. Data on workers is used to estimate wage equations that also depend on age. Results show concave age-wage and age-productivity profiles. On average, we find that wages do not deviate significantly from productivity. For certain sub-groups, our results suggest some discrepancies between wages and productivity. This is the case for older workers with at least an undergraduate degree for whom productivity appears to be lower than their wages, while the reverse seems true for younger men. However, even in those cases, productivity differentials are too imprecise to draw any firm conclusions.

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Authors and Affiliations

  1. Institute of Applied Economics, HEC Montréal, 3000, chemin de la Côte-sainte-Catherine, Montréal, QC, H3T 2A7, Canada

    Benoit Dostie

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  1. Benoit Dostie
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Correspondence to Benoit Dostie.

Additional information

A previously distributed working paper version of this article used data from 1999 to 2003. I would like to thank two anonymous referees, John Abowd, Daniel Boothby, Rob Clark, Morley Gunderson, Rajshri Jayaraman, André Léonard, Kathryn Shaw, Étienne Wasmer and participants at the Workshop on Ageing Workforces (Louvain-la-Neuve 2010) for their helpful comments. I also thank Marie-Pierre Pelletier and Lene Kromann for their excellent research assistance. I gratefully acknowledge funding from Human Resources and Skills Development Canada. The usual caveats apply.

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Dostie, B. Wages, Productivity and Aging. De Economist 159, 139–158 (2011). https://doi.org/10.1007/s10645-011-9166-5

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