Does the ageing workforce hamper the innovativeness of firms? (No) evidence from Germany

Abstract

Due to demographic changes, the personnel structure of the workforce in countries like Germany and Japan will change considerably in the next few years. At the same time, companies need creative and skilled human resources to innovate. We analysed data from the 2001 German Community Innovation Survey to explore the impact of personnel structure (share of older employees, skills shortages, share of highly skilled employees) on innovation input and output. Overall, we did not find support for a negative effect of a high share of older employees in a company on innovation output. However, companies with a high share of older employees tended to invest less in further training (considered innovation input). This contradicts the call for lifelong learning. In accordance with our propositions, a high share of highly skilled employees had a positive effect on innovation input and output. Companies which experienced skills shortages were more likely to invest in further training. However, they were, somewhat surprisingly, more innovative than companies which did not suffer from skills shortages.