Aging, Technology and Productivity Francesco Daveri Mika Maliranta Università di Parma, and IGIER ETLA, Helsinki francesco.daveri@unipr.it mika.maliranta@etla.fi This draft: September 13, 2005 The possibly negative productivity counterpart of an aging workforce at times of fast technical change is often seen as an important policy issue. We use Finnish plant data constructed by linking various registers of firms, plants and individuals to test whether plants employing an older labor force have suffered productivity shortfalls compared to other plants during the 1990s through the early 2000s – the new economy period - while controlling for other plant productivity determinants, such as plant age, size and turnover rates. Our estimates indicate that this has been the case. In the electronics industry, the seniority-productivity profile at the plant level reaches a peak in the sixth year of tenure, but then productivity dramatically falls by a cumulative 40% in the following five years. The declining part of the curve is instead either absent or more delayed in time, and definitely less steep for the other manufacturing industries. The age-earnings relation is instead usually concave but upward sloping. The discrepancy of results for productivity and wages is consistent with Lazear’s theory of deferred payments. It also suggests that the practice of exploring the relation between plant or worker characteristics and wages as if an age- productivity relation were investigated may be misleading. Keywords: Aging, Technology, Productivity, High-tech Industries, Total Factor Productivity, Wages, Finland (*)We are indebted to seminar participants at the Government Institute of Economic Research (Helsinki), the CESPRI-IGIER Bocconi seminar “Firms, Human Capital and Productivity”, the 5 th “Economics of ICT Conference” in Mannheim, 2005 ONS Conference on the “Analysis of Enterprise Micro-Data” in Cardiff and, particularly, to Gilbert Cette, Pekka Ilmakunnas, Olmo Silva and Alexandra Spitz for their useful comments on a previous draft. Maliranta gratefully acknowledges financial support provided by Tekes within the Research Programme for Advanced Technology Policy (ProAct).