Big Data at Work: Age and Labor Productivity in the Service Sector

Does productivity decline with age? Does population aging harm economic growth? We exploit process-generated data from a large and typical service-sector company. We find no decline in average productivity in the age range of 20-60. This result is precisely measured. Our innovative identification strategy corrects for sample selection, endogeneity of age composition and age-cohort confounding. Our big data are essential to extract the signal from the noise that has marred many previous studies. While average productivity stays flat, we find variation according to task complexity. Productivity increases with age in teams with more demanding tasks and decreases in routine tasks.