Age Diversity in Firms and Its Relation to Wages

Abstract The ongoing demographic change taking place in most developed countries leads to societies with a disproportionally share of older individuals contributing to both challenges and opportunities at the individual, firm, and societal level. The demographic change and its associated outcomes have received considerable attention from both the academic sphere as well as from policy makers. If the change in the overall society is mirrored at the firm level, one would observe a large share of older individuals within firms and an overall changed age structure. In this chapter, we assess if the age diversity and age structure at the firm level is associated with a change in the wage of individual employees, controlling for individual, firm, and regional specific factors. We further differentiate across occupations to observe how the effect differ across the hierarchal levels within firms. We emphasize the role of managers as they have a unique role in the firm. We use administrative data from Germany covering 10% of all fulltime employees from 2012 to 2018.