Template-Type: ReDIF-Paper 1.0
Title: Old Workers, New Capital
Author-Name: Philippe d'Astous
Author-Name: Thomas Geelen
Author-Name: Jakub Hajda
Creation-date: 2025
Abstract: How does workforce aging affect corporate investment? We investigate this question using comprehensive matched employer-employee data. Exploiting variation in the age of newly hired workers, we find that firms hiring older workers significantly boost capital investment. Specifically, a typical increase in the average age of new hires raises investment rates by 0.3 percentage points—a 2.6% increase relative to the sample mean. To establish causality, we implement a shift-share instrumental variable approach that leverages industry-level demographic trends interacted with firms’ initial workforce composition. Our results are consistent with a model where firms optimally choose between hiring younger and older workers who differ in productivity and wages.
Classification-JEL: G30, G31, J1
Keywords:  corporate investment, workforce aging, labor heterogeneity
File-URL: https://ire.hec.ca/wp-content/uploads/2025/12/cahier_IRE_20_old_workers_new_capital.pdf
File-Size: 720
Handle: RePEc:rsi:irersi:20