Ageing and labor productivity

We exploit a policy-induced shift in the labor supply of elderly (age 63-67) workers in Norway to explore how aging of the workforce within existing firms is likely to affect labor productivity and the demand for younger workers. Our results are imprecise, but indicate that a higher share of age 63-67 workers increases total wage costs and has a small positive effect on labor productivity in the short run. Postponed retirement of existing elderly workers leads to a significant decline in the hiring of younger (below age 30) workers.