Age structure of the workforce and firm performance

Abstract

Purpose

Given the ongoing demographic change in European countries, this paper aims to explore empirically the link between age structures of employees in firms and firm performance.

Design/methodology/approach

Based on theoretical considerations, the paper examines the link between both the average age and the standard deviation of employees' age and firms' value added per employee. Linked employer employee data of all private‐sector firms in Denmark with at least 20 employees is used.

Findings

A pyramidal or inverse U‐shaped interrelation is found between mean age and standard deviation of age and value added per employee, respectively.

Research limitations/implications

It would be interesting to determine whether the results hold for different countries with other institutional environments.

Originality/value

This is the first paper to examine the link between corporate age structures and firm performance for a whole country. The paper gives insights for both academic scholars and practitioners, who may take the results into account in formulating an efficient personnel policy.

Citation

Grund, C. and Westergaard‐Nielsen, N. (2008), "Age structure of the workforce and firm performance", International Journal of Manpower, Vol. 29 No. 5, pp. 410-422. https://doi.org/10.1108/01437720810888553