Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/44238 
Year of Publication: 
2010
Series/Report no.: 
IZA Discussion Papers No. 5121
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Using longitudinal employer-employee data spanning over a 22-year period, we compare age-wage and age-productivity profiles and find that productivity increases until the age range of 50-54, whereas wages peak around the age 40-44. At younger ages, wages increase in line with productivity gains but as prime-age approaches, wage increases lag behind productivity gains. As a result, older workers are, in fact, worthy of their pay, in the sense that their contribution to firm-level productivity exceeds their contribution to the wage bill. On the methodological side, we note that failure to account for the endogenous nature of the regressors in the estimation of the wage and productivity equations biases the results towards a pattern consistent with underpayment followed by overpayment type of policies.
Subjects: 
aging
productivity
wages
JEL: 
J14
J24
J31
Document Type: 
Working Paper

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