Age-differentiated work systems enhance productivity and retention of old employees

Abstract

The rapid aging of the workforce in Germany threatens to undermine the competitiveness of enterprises mainly in two respects. The productivity of enterprises might decrease when relative productivity of old employees is lower than productivity of younger employees, and when employers cannot avoid an increase in the share of old employees. In addition, enterprises might lose valuable knowledge and skills when large cohorts of well-educated employees of the baby boom generation retire and have to be replaced by employees from smaller cohorts of labor market entrants.