Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/55054
Authors: 
Cataldi, Alessandra
Kampelmann, Stephan
Rycx, Francois
Year of Publication: 
2011
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5938
Abstract: 
Using longitudinal matched employer-employee data for the period 1999-2006, we investigate the relationship between age, wage and productivity in the Belgian private sector. More precisely, we examine how changes in the proportions of young (16-29 years), middle-aged (30-49 years) and older (more than 49 years) workers affect the productivity of firms and test for the presence of productivity-wage gaps. Results (robust to various potential econometric issues, including unobserved firm heterogeneity, endogeneity and state dependence) suggest that workers older than 49 are significantly less productive than prime age and young workers. In contrast, the productivity of middle-age workers is not found to be significantly different compared to young workers. Findings further indicate that average hourly wages within firms increase significantly and monotonically with age. Overall, this leads to the conclusion that young workers are paid below their marginal productivity while older workers appear to be overpaid and lends empirical support to theories of deferred compensation over the life-cycle (Lazear, 1979).
Subjects: 
wages
productivity
aging
matched panel data
JEL: 
J14
J24
J31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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