1 Ageing and productivity: comment Ilmakunnas et al. Discussion of Ageing and Productivity Etienne Wasmer (Sc. Po. Paris)

2 Ageing and productivity: comment u Really interesting piece –a general framework –relations between age and absenteism –age and working capacity –age and productivity at the plant level –Some policy implications Introduction 1

3 Ageing and productivity: comment u Summary of findings -productivity is multi-dimensional -effect of age on absenteism is complex and not monotonic (frequency vs. duration) -various cognitive and non-cognitive ability vary differently with age: most decline with age but some (e.g. verbal ability) increase -overall, labor market behaviour more important than age on productivity Introduction 2

4 Ageing and productivity: comment Why important to know? Several implications a) for reforms of pension systems, notably the optimal age of retirement b) but also for the design of training policies and even of education policy (cohort effects; general vs. specific education and obsolescence rates of skills) c) and for employability of “seniors” Introduction 3

5 Ageing and productivity: comment In short: implications for most aspects of labor economics This discussion u Couple of general remarks u Enlight conclusions and policy u Two conjectures

6 Ageing and productivity: comment First, a few missing dimensions: Career mobility. Most of the relation between age and productivity is determined by changing occupation or even sectors. Variant of the Roy model. Verbal skills matter more at a higher level of hierarchy. Learning skills matter more at a younger age. So occupations are a first order determinant of the age-productivity link.

7 Ageing and productivity: comment u Does it matter? u When estimating a relation between age and “errors” on the assembly line, potentially an upward bias: those who commit more mistakes may be more likely to have no promotion hence to remain an assembly line worker u Literature on peer effects

8 Ageing and productivity: comment u Second point: gender –Too politically correct? Are skills and productivity depreciating faster or not depending on gender -In most countries, female workers retirement age is lower (legal and effective). Could have been adressed

9 Ageing and productivity: comment Related point: endogeneity issue, related to the career choices and participation decisions Most skills are maintained when they are useful and needed. Time horizon matters a lot (this is why older persons should play Scrabble as long as they can, why their skills deteriorate fast when their spouse dies, why older heads of states often die one or two years after they resign, etc…)

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13 Ageing and productivity: comment u Endogeneity of skill maintenance decisions

14 Ageing and productivity: comment Labor market theory of this curve RA for FRDB Author for FRDB Coordinator for FRDB Discussant for FRDB Productivity Wage

15 Ageing and productivity: comment A side remark: no mention of life expectancy – a) cognitive ability and its maintenance impact on life expectancy b) statistics easy to find, and thus possible to draw inference on the end of career of senior workers by sector, education, country, gender…

16 Ageing and productivity: comment More important But what would really improve the work is the missing link between technology and aging Are IT youth-friendly relative to older workers? Can we think of IT’s that would instead raise the relative productivity of senior workers?

17 Ageing and productivity: comment Policy implications What policy conclusions do we reach? Do we need to subsidize firms who invest in uskills of senior workers, raising their employability uIT’s friendly to senior workers? uWhat about education?

18 Ageing and productivity: comment “cristallized abilities” are presumably to a large extent cohort effects. The generation before us makes no grammatical mistake and remember many poetries but cannot plug a PC and are disarmed in the “trial and error” process of the internet. A conclusion would be that the construction of skills is as much a collective effort as an individual one. Education

19 Ageing and productivity: comment Open issue: stress at the workplace and p.r.