Ageing, Productivity and Wages in Austria

Ageing, productivity and wages in Austria

PurposeThe relationship between workforce aging and labour productivity has not been sufficiently explored, despite that both are crucial for socioeconomic welfare. This paper examines existing research on the impact of an aging workforce on labour productivity in Europe.Design/methodology/approachThe methodology includes a comprehensive literature review on the relationship between an aging workforce and productivity, an analysis of international productivity trends, and the examination of demographic databases from major international institutions to understand global and European population trends.FindingsWhile there appears to be a notable and negative association between the aging of the labour force and productivity, this relationship is not fixed; it seems to be contingent upon the evolution of the economy’s industrial structure. The paper concludes with reflections on potential levers and policies in the areas of industrial structure and digital empowerment. These measures will ensure that, both in Europe and globally, the population aging phenomenon becomes a smooth social transformation that contributes to the socio-economic well-being of future generations.Originality/valueThe paper enhances the understanding of the relationship between workforce aging, labour productivity, and industrial structure in Europe. It suggests that the negative impact of aging on productivity is dynamic rather than static. As economies shift from labour-intensive to capital- and/or knowledge-intensive industries, the adverse effects of aging may be mitigated or even reversed. This insight encourages changes in the European industrial structure to better adapt to the ongoing trend of workforce aging.

For many years, there has been considerable debate about whether the IT revolution was paying off in higher productivity. Studies in the 1980s found no connection between IT investment and productivity in the U.S. economy, a situation referred to as the productivity paradox . Since then, a decade of studies at the firm and country level has consistently shown that the impact of IT investment on labor productivity and economic growth is significant and positive. This article critically reviews the published research, more than 50 articles, on computers and productivity. It develops a general framework for classifying the research, which facilitates identifying what we know, how well we know it, and what we do not know. The framework enables us to systematically organize, synthesize, and evaluate the empirical evidence and to identify both limitations in existing research and data and substantive areas for future research.The review concludes that the productivity paradox as first formulated has been effectively refuted. At both the firm and the country level, greater investment in IT is associated with greater productivity growth. At the firm level, the review further concludes that the wide range of performance of IT investments among different organizations can be explained by complementary investments in organizational capital such as decentralized decision-making systems, job training, and business process redesign. IT is not simply a tool for automating existing processes, but is more importantly an enabler of organizational changes that can lead to additional productivity gains.In mid-2000, IT capital investment began to fall sharply due to slowing economic growth, the collapse of many Internet-related firms, and reductions in IT spending by other firms facing fewer competitive pressures from Internet firms. This reduction in IT investment has had devastating effects on the IT-producing sector, and may lead to slower economic and productivity growth in the U.S. economy. While the turmoil in the technology sector has been unsettling to investors and executives alike, this review shows that it should not overshadow the fundamental changes that have occurred as a result of firms' investments in IT. Notwithstanding the demise of many Internet-related companies, the returns to IT investment are real, and innovative companies continue to lead the way.

How to maintain the momentum of sustained economic growth has always been an important issue of concern to all countries in the world. Using a three-level progressive analysis framework, the article provides an in-depth analysis of the evolution of supply-side economic growth drivers in China from 2003 to 2021 and the magnitude of their roles. The results show that in terms of the composition of growth drivers, total factor productivity makes the largest contribution to economic growth, while the contributions of capital scale and labor scale rank second and third, respectively; in terms of the industrial dimension, the changes in the contributions of each factor to GDP growth mainly originate from the influence of secondary and tertiary industries. From the decomposition of total factor productivity growth, industrial capital productivity and capital allocation structure both play a positive pulling effect on overall capital productivity, but have a weak downward trend. Industrial labor productivity and labor allocation structure both play a slight negative pulling effect on overall labor productivity; from the deep decomposition of growth momentum, industrial factor productivity and industrial factor allocation structure play a major positive pushing effect and a weak negative pushing effect on economic growth, respectively. The conclusion of this paper provides a valuable reference for developing countries on how to maintain the momentum of economic growth.

Summary Cities, contributing more than 75% of global carbon emissions, are at the heart of climate change mitigation. Given cities' heterogeneity, they need specific low-carbon roadmaps instead of one-size-fits-all approaches. Here, we present the most detailed and up-to-date accounts of CO2 emissions for 294 cities in China and examine the extent to which their economic growth was decoupled from emissions. Results show that from 2005 to 2015, only 11% of cities exhibited strong decoupling, whereas 65.6% showed weak decoupling, and 23.4% showed no decoupling. We attribute the economic-emission decoupling in cities to several socioeconomic factors (i.e., structure and size of the economy, emission intensity, and population size) and find that the decline in emission intensity via improvement in production and carbon efficiency (e.g., decarbonizing the energy mix via building a renewable energy system) is the most important one. The experience and status quo of carbon emissions and emission-GDP (gross domestic product) decoupling in Chinese cities may have implications for other developing economies to design low-carbon development pathways.

This study investigated the impact of the people category of the Sustainable Development Goals (SDGs) on sustainable and conventional economic growth in Asia and the Pacific region, using a sample of 52 selected countries between 2000 and 2023. Employing two distinct models, model A1 for conventional economic growth and model A2 for sustainable economic growth, we explained the relationships between five SDG indicators: employed poverty rate, stunted children, expenditure on health, expenditure of education, and % of women MNAs on economic growth. This study employed a fixed-effect model and random-effect model to investigate the impact of the people category SDGs on traditional and sustainable economic growth. The comparative analysis of each SDG in both models revealed valuable insights. SDG 1, “employed poverty rate”, has a positive impact on economic growth in both models, while SDG 2, “percentage of stunted child”, did not significantly influence economic growth in either model. Moreover, SDG 3 and SDG 4, relating to “government’s health expenditure per capita” and “government’s Education education expenditure per capita”, respectively, exhibited a positive impact on traditional and sustainable economic growth. Conversely, SDG 5, “percentage of women members of national parliament”, displayed an insignificant impact on traditional and sustainable economic growth models. In conclusion, this study suggests that policymakers should prioritize targeted interventions to alleviate employed poverty, enhance healthcare, and boost education spending. Moreover, promoting women’s representation in national parliaments should be approached with context-specific strategies to maximize its impact on economic growth.

Controlling for training effort at the firm level as well as for firm-specific characteristics we assess the relation between the firm’s productivity level and the age composition of its employees using a matched employer-employee data set for Austria. Our aim is to test whether the hump-shaped age profile of the employees’ age structure on labour productivity that we found in previous studies is robust once we control for training intensity. We find a simultaneous, negative productivity effect of the share of young workers and old workers on labour productivity in sample of small as well as in sample of large firms. Furthermore it turns out that training intensity is an important variable for labour productivity.

Purpose This study empirically examines the states of labor productivity convergence and output convergence at the aggregate and disaggregate levels in six major South Asian countries covering Bangladesh, Bhutan, India, Nepal, Pakistan and Sri Lanka. Design/methodology/approach This study applies quantitative research tradition to reach the research goal. It uses World Development Indicators and Groningen Growth and Development Center databases from 1980 to 2023 for output convergence at the aggregate and disaggregate levels and from 1991 to 2023 for labor productivity convergence at the aggregate and disaggregate levels. The convergence model used in this study is based on Barro’s neoclassical growth model. The study deploys the random effects model as suggested by the Hausman test to understand the convergence at aggregate (GDP growth) and disaggregate (sectors) levels with its potential impact on economic growth. Findings The study finds that output convergence exists at both the aggregate and disaggregate levels. It also finds that the impact of foreign direct investment (FDI) inflows to all three sectors (agriculture, industry and services) are favorable. At the industry level, tariffs have an inverse relationship with sectoral labor productivity while higher tariffs are associated with lower labor productivity, higher total output, more establishments and more workers. Employability and exports are positively related to sectoral labor productivity, while imports are negatively related to productivity. Export expansion increases worker productivity in agriculture and manufacturing but has a smaller and negative impact on the service sector. Practical implications The study recommends deploying more focus and bringing improvements in export and FDI inflow to benefit the respective economies from labor productivity and output convergences. Originality/value This study argues that labor productivity acts as an important parameter to accelerate the development of an economy and supports per capita economic growth comparisons. This study makes a solid contribution in understanding convergences at aggregate and disaggregate levels with the drivers of labor productivity in agriculture, manufacturing and services sectors.

The Russian economic growth is associated with the increase in the competitive advantages of the domestic industry and the material sector of economy, including agriculture. The article studies the factors that have positive impact on the economic development and growth, as well as those that restrain these processes. The problem of assessing the need in innovative activity of economic sectors is actualized taking into account the differences of Russian regions in terms of agricultural productivity. The use of the imitations and innovations’ theory and methodological instruments of production functions’ models is substantiated. Thus, the Solow model is studied, and the improvement of the model, including the funds’ introduction delay when the optimal accumulation rates are equal to the elasticity coefficients by funds, is shown. The factors that include various economic growth models: volumes of capital, physical and intellectual labor, labor productivity, the production returns rate, the scientific and technological progress rate, the population growth rate, the consumer demand, production structure, institutional factors, and saving rates, are studied. It is proved that the study of neoclassical models of the economic growth shows their incomplete adequacy taking into account all differentiating factors, competitive processes and differentiating branch structures of economy. In the work, the hypothesis of the interrelationship of the saving rate, labor productivity and the volume of investments in Russia is mathematically proven taking into account the differentiation of Russian regions and peculiarities of statistical accounting.

This communication describes the parameter knowledge productivity, in what concerns national economies' and firms' sustainable growth. Taking knowledge, individual and social, as the foundation for value, it clarifies how society has a natural propensity to increase its value creation and, simultaneously, its value distribution. The discussion is about the optimum balance between value creation and distribution, the former being triggered by investment and the latter represented by labor costs and supporting consumption. The conclusions are, for whole economies, that society quickly distributes extra value in forms of salaries and social benefits increases, flattening the growth rate of knowledge productivity. However, for individual firms, knowledge productivity may increase steadily, what can be considered as a core strategy for firms' economic sustainable growth. I. INTRODUCTION Sustainable growth means constant or increasing growth for a long period. What is the right strategy to achieve this goal, at the firm's level? Many authors and models have produced a variety of answers, dealing with specific parts of the whole, like marketing strategies, R&D efforts, organization management, lean production and others. The aim is increasing profits, output, market shares, capital intensities, shareholders' equity, stakeholders' happiness, etc. However, is there an elemental and simple answer that defines a core strategy? I argue in this communication that the objective of increasing knowledge productivity is a good and simple basis for that. Data from OECD about Unit Labor Costs will be used to illustrate how knowledge productivity varies with economic growth and how society distributes value at about the same pace as creates it. The causal-effect relation between the two parameters, knowledge productivity and growth, will be justified by a logical argument, that shows how the increase of individual knowledge depends on action and work involving technology and capital. As such, investment should grow at least at the same pace as individual and social knowledge. On the other hand, consumption feeds individual knowledge maintenance and creates conditions for new knowledge, what leads to conclude that consumption is as crucial as investment. Finally, transferring these arguments to the firm's level, propositions will be outlined, relevant to the firm's growth strategy, which could be condensed in one only parameter - the increase of the firm's knowledge productivity. Two examples of economic sectors, from the Portuguese economy, will depict how the growth rate of knowledge productivity correlates with Gross Value Added (GVA) growth rate. I will use the term individual knowledge as the knowledge that exists and belongs to the individual and, as such, can not be directly assessed. It is expressed through work, therefore, indirectly valued. Social knowledge has a value attributed by society and may be recognized and accessed, as it is embodied in technological and capital forms.

Central American (CA) countries are considered to be part of the developing world. Their small and open economies have historically relied on the production and exports of agricultural products. In the last two decades, even though the share of agriculture in the GPD has declined significantly facing the surge in shares of manufacturing and service sectors, agriculture remains as one of the major economic activities in the CA countries. Agricultural sector employs a large portion of the economically active population and is an important source of income, particularly for rural and unskilled labor force. Significantly diversified economic performance has been observed among the seven CA countries during the past decades. Among them, Costa Rica and Panama are the most developed in terms of per capita GDP and outperformed the other five countries in various social-economic indicators, whereas Honduras and Nicaragua are the least developed. Identifying the sources contributing to observed differences among the CA countries has important implications for policy makers in their pursuit of economic growth. Therefore, this thesis attempts to examine two important issues for the seven CA countries – economic diversification and its link to economic growth as well as sectoral productivity differences – during the period 1990-2010. We first examine the economic diversification and its possible relation to economic growth. In the second part of the thesis, we then move to analyze the factors leading to differences in the labor productivity of industrial and agriculture sectors. According to Esanov (2012), economic diversification can be categorized into the product or export diversification. Both these two types of diversification are considered to enhance economic growth. To measure diversification, the trend of GDP composition by sector is used as a measure of product diversification while Herfindahl-Hirschman Index (HHI) is calculated to measure export diversification. The empirical results in this study suggest that the diversification strategy in the CA region is country-specific, Costa Rica and Panama experienced significant achievements while the other five countries seem to be lagged. Export diversification has been achieved mostly within the same agricultural sector but not among sectors; CA countries have introduced new export products into their export basket, but those new products mainly come from agricultural sector. In addition, the levels of diversification experienced by the CA countries are significantly lower compared to the developed economies. Based on regression analysis controlling for year and country specific unobserved characteristics, this study provides empirical evidence supporting the positive association of export diversification and per-capita-GDP growth. In the second part of the thesis, determinants contributing to observed differences in labor productivity between the industrial and agriculture sectors are analyzed through a two-stage regression model. The data collected indicates that, during 1990-2010, the level of labor productivity in the industrial sector has been higher and growing at a greater speed in comparison with the agricultural sector. A systematic review of the literature suggests that this sectoral productivity gap can be explained by variables such as physical capital investment, openness of the economy, foreign direct investment (FDI) as well as education (human capital). To test the hypothesis that those variables have a greater effect in industrial sector than in agricultural sector, which consequently implies a wider gap in labor productivity, a structural equation model is constructed. The specification in our econometric model explicitly considers possible problem of endogenous explanatory variable. The regression results suggest physical capital investments, openness and education are the major drivers to widen up the gap of labor productivity in the industrial and agriculture sectors. As a reasonable proxy for knowledge spilled into the CA countries from the developed countries, FDI is found to have a diminishing effect on productivity differences; it is a determinant of productivity differences at low level of FDI, but it reduces the productivity differences at large enough level of FDI inflow. Study sectoral labor productivity differences is of special significance in Central America, because these countries have labor-intensive economies and both agricultural and industry sectors together employ a large share of the economically active population. Due to its small share in the world economy, Central America has often been left out in researches on topics related to economic growth. To the best of our knowledge, there has not been previous literature on economic diversification and sectoral productivity differences in the CA countries as a whole. In this regard, this thesis fills in the gap and thus represents a significant complement to literature on the region.

SDG 8’s goal is to promote sustained, inclusive, and sustainable economic growth; full and productive employment; and decent work for all. This chapter examines the experiences of East Asian developing countries in achieving rapid and inclusive economic growth by focusing on the role of international tradeand foreign direct investmentnexus created through global value chains (GVCs)by multinational corporations (MNCs). GVCs enabled participating companies and countries to improve productivity, contributing to economic growth. The factors attributable to the participation in GVCs include high competitiveness of local companies and open business environment created by the Asian government. Moreover, construction and maintaining well-functioning soft (e.g., education and legal systems) and hard (e.g., transportation and communication systems) infrastructure by the government and international donors contributed to the creation of business-friendly environment. Faced with growing protectionism and the threats of growing US-China rivalry, infectious diseases, climate change, etc., maintaining an open and transparent rules-based business environment is crucially important to further achieving sustained, inclusive, and sustainable economic growth. In the light of absence of effective global economic order, exemplified by ineffectiveness of the World Trade Organizationin trade liberalization as well as dispute settlement, regional economic frameworks such as the CPTPP and RCEP in the Asia and Pacific region would be proven to be effective to achieve the goal.

Strong government policies in the 1950s~1960s helped Korea to partake in ‘The East Asian miracle’ (World Bank, 1993). An effective policy environment allowed Korea to take advantage of its first demographic dividend, and to attain rapid industrialization and strong labor productivity within a century (Park, Lee& Mason, 2012). Korea is now the world’s eleventh biggest economy (World Bank, 2017). While a young Korean workforce ushered in domestic economic growth over the last decade, an aging workforce now threatens Korea’s labor productivity prospects. Korea has been aging since the 1970s and in 2018, its elderly (citizens aged 60 years and over) will account for at least 14% of Korean population (Howe, Jackson & Nakashima, 2007). This paper analyzes Korean economic policy alternatives necessary for bridging the forthcoming labor gap, and for sustaining (and improving) Korean labor productivity in the long run amidst an aging workforce. Given an economic policy focus of the paper, a comparative research methodology is applied in analyzing policy alternatives. The paper considers economic policies for aging labor applied in Japan, Germany and US because (a) all three countries have advanced aging policies (Hoehn, 2000; Kim 2010; Achenbaum & Carr, 2014) (b) Japan’s cultural environment and family values are relatively similar to ones in Korea (Kim, 2010) and (c) Korean legal system is similar to German and U.S. legal systems (Jin, 2004). The first section of the paper highlights the urgency in addressing Korea’s aging demographic crisis. The second part of the paper discusses existing government aging policies to enhance labor productivity in its aging workforce. The last section of the paper offers policy suggestions that can add value to existing government policies on sustaining long-term Korean labor productivity.

The growth of the Philippine economy has predominantly been led by the services sector. However, this growth pattern has resulted in increased employment primarily within subsectors characterized by relatively low labor productivity and wages. Given that the services sector accounts for the largest share of Gross Domestic Product (GDP) and employment among major economic sectors, enhancing productivity in labor-absorbing services is essential for both growth and equity. Analysis of labor productivity patterns reveals significant variation across services subsectors. While the Financial and Insurance Activities, Real Estate, and Information and Communication sectors have the highest productivity, the Wholesale and Retail Trade, Transportation and Storage, Accommodation and Food Service Activities, and Other Services sectors recorded the lowest. Low-productivity sectors primarily comprise low- to medium-skilled occupations. There is also variability in labor productivity within each subsector across regions. Regional disparities in productivity are most pronounced in the high-productivity sectors: Financial and Insurance Activities, Real Estate, and Information and Communication. In contrast, Transportation and Storage and Other Services exhibit the least variability in productivity levels. A mix of strategies is needed to enhance the capabilities of firms and workers and to incentivize them to upgrade. To increase labor productivity in the services sector, a high-level Theory of Change model was developed, focusing on four core strategies: management quality and practices, business innovation, workforce development, and technology adoption. Although broader structural reforms must also be pursued to create an operating environment conducive to upgrading, these reforms are beyond the control of individual firms. The umbrella Theory of Change provides a comprehensive and coherent framework to help the government more effectively identify pathways to connect interventions to desired outcomes, rationalize its investments to assist firms and workers, and adopt appropriate policy levers.

This study investigates the impact of agriculture, industry, and the service sector on Nigeria's economic growth from 1990 to 2022, using data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin. Employing an Ordinary Least Squares (OLS) regression model, the research explores the contributions of these key sectors to Nigeria's Gross Domestic Product (GDP). The findings reveal that the industrial sector has a significant positive effect on GDP, emphasizing its crucial role in driving economic growth. The agricultural sector also contributes positively, though its impact is relatively modest, highlighting the need for modernization and investment to enhance productivity. Surprisingly, the service sector shows a statistically significant negative impact on GDP, contrary to its traditionally recognized role in economic expansion. This anomaly suggests underlying structural issues within the sector that require further investigation. The study's model explains approximately 59.65% of the variation in GDP, with no significant evidence of autocorrelation, heteroskedasticity, or multicollinearity affecting the results. Based on these findings, the study recommends targeted policy interventions to improve agricultural productivity, strengthen industrialization efforts, and reform the service sector to foster balanced and sustainable economic growth in Nigeria.